As the supply chain world continues to expand, it takes much more work to reach goals without help from partners from the outside. That’s where outsource logistics can come to the rescue. Outsourcing logistics to a 3PL can be pivotal in helping food & beverage companies meet those goals. Here we will take a deeper look at outsource logistics, at the types of services that can be outsourced and reasons why a 3PL like Port Jersey can relieve some of the burden and keep your company ahead of the game.
What is Logistics Outsourcing?
Having your own logistics team can be extremely taxing and expensive. Manpower with expertise is needed, as is a place where they will work and a technology platform for them to work on. But those concerns can be answered with logistics outsourcing. When a company uses an external provider, which is known as a 3PL or third-party logistics, to handle various supply chain functions it is called logistics outsourcing. Among the areas 3PLs cover are shipping, storing items in warehouses and packing a company’s goods. The 3PL market continues to grow with outsourcing to 3PLs reaching 10.2% of total logistics costs globally. In the United States, that figure is even higher at 12.4% of all logistics costs. The growth is expected to continue into the future with the 3PL market expected to reach almost $300 billion by 2023.
Types of Logistics Services for Outsourcing
Outsourced logistics services come in many different forms. Let’s take a look at them:
Ambient warehouses can store items in a dry environment at room temperature, which is usually around 80 degrees Fahrenheit year-round. Electronics, paper products, and toys can be stored in an ambient warehouse, and certain items, such as canned food, cereals, and cake mixes. Most food and pharmaceutical products must be kept in a certain temperature range. Temperature ranges differ from product to product, and can be stored in temperature-controlled warehouses until they are picked up. Items like candy and chocolate need to be stored in a climate-controlled warehouse that is between 56°F and 75°F. Fruits, vegetables, meat, and fish must be stored in refrigerated warehouses where the temperatures range between 33°F and 55°F. Certain perishable items, biopharmaceutical items, and some flowers and plants are to be stored in warehouses with a temperature of 32°F or below.
A dedicated warehouse is a facility exclusively for a single tenant in which all of the products stored in it belong to that one tenant. All the operations, labor, new technology, and equipment are dedicated to that tenant. The benefits are that the single business controls the warehouse and keeps the business operations centralized. Renting or buying the location outright is optional. Labor, operations, new technology, and equipment are allocated for the tenant’s use only, unlike with a shared warehouse. Multiple businesses utilize the warehouse and all of its resources in a shared warehouse. The businesses must also share expenses and additional overhead costs. A shared warehouse can save a company money over time by renting a partial space. The trade-off is that the company must share equipment.
Sometimes having a warehouse, whether dedicated or shared, is just one of the concerns of a company. Businesses can often use help in handling the processes and documentation that come with moving products from Point A to Point B. Suppose they are dealing with a limited workforce or are trying to use a poor software system. In that case, companies can turn to a 3PL logistics provider to take over the responsibilities of keeping track of where the shipments are going and whether invoices have been paid.
It doesn’t matter whether your shipments are domestic or being moved halfway around the globe; 3pl teams can help execute the day-to-day shipping operations. Transportation management involves complicated technology that handles thousands of shipments across multiple carriers and modes of transportation. Outsourcing can be done for just about anything that needs to be shipped — from a single box truck haul to many international shipments. In full or in part, 3PLs can be the way to go.
The last three years has seen an increas in the volume of shipped products. It’s also played havoc on fulfillment issues. That has opened the door for 3PLs to fill the gaps when fulfillment is breathing down the neck of the shippers. Fulfillment logistics can include managing inventory levels, filling orders, packaging goods, placing on shipping labels, and tracking products. Third-party logistics can also help costs for shippers by offering multi-client warehousing.
Value Added Services
Value-added services can include many different duties that will help meet client demands. Value-added warehousing and distributing provide long-term contract warehousing or distribution center operations to the customer. Other value-added services can include picking, packing, labeling, returns management, and quality control.
Top Reasons Food and Beverage Companies Outsource Logistics
Now that we have discussed what logistics outsourcing is and its types of services, let’s focus on why outsourcing with 3PLs can be beneficial for food and beverage companies.
- Keep stock from spoiling with proper ambient warehousing: Outsourcing allows for products to be housed in various warehouses with ambient or different climate-controlled conditions. With just one warehouse, certain products would not stay at the correct temperature to remain fresh and sellable. With outsourced warehouses, one product can survive nicely in one place while the other can do the same in another. No longer will one bad apple spoil the warehouse.
- Reduction of indirect costs: By outsourcing logistics to a partner, a business can transform some direct costs linked to the logistic activity into variable costs. The business that outsources its logistics won’t have to invest in spaces and warehouses, systems and technologies, employees, and safety measures.
- Reduce labor costs: Whether it be warehouse worker jobs or office clerical positions, outsourcing means fewer workers are needed to handle the duties that the outsource provider takes over,
- Increase warehouse productivity and efficiency: With the streamlined approaches brought to the table by the experts of 3PLs, productivity and efficiency can attain higher levels.
- Gain a strategic advantage for your company: Not only can a 3PL save you major headaches, but having an outsourced partner opens the door to more contacts and chances to find ways to do better than your competitors.
- Navigate the legal and compliance requirements, particularly for those goods that require proof of cold chain custody: Regulations can be the bane of any logistics manager’s existence. But the ones involving cold chain custody need to be closely adhered to. That’s where logistics outsourcing providers’ expertise, facilities, and equipment can prove crucial and ensure all perishable products reach their destination with proof they are still usable.
- Improve Inventory management: Again, the expertise of a logistics outsourcing partner can be the difference maker. With the ability and the software to see a product’s particulars, the partner can keep you more up-to-date on inventory.
- Manage picking, packing, and getting ready for shipping: Among the value-added services offered by an outsource partner, having a 3PL take over the picking, packing, and getting ready for shipping roles can unburden a lot of labor costs. When you need a great deal of product moved in a short time and fulfilling the customers’ needs is at the top of your list, it’s crucial to have the expert hands of 3PL employees.
- Enhance operational efficiencies: With the knowledge 3PLs bring to the logistics game and the smoother software, it will make operations more efficient and reduce the amount your employees spend on dealing with costly errors. It will also free up time for your employees to take on other assignments.
- Avoid continued expansion of resources: While volumes and costs continue to rise and businesses need to grow to keep up in the supply chain world, there is an area where logistic outsourcing saves you money: expansion. With a 3PL partner taking on some of your burdens, your business doesn’t have to keep up with adding key resources such as warehouse space, staffing, and equipment.
- Reduce total logistics costs and improve delivery performance: The overall outlay on logistics will lessen when you add on a 3PL partner that will be able to run a more effective workflow that will include improved delivery.
- Optimizing your delivery network to raise OTIF metrics and improve the customer experience: Everyone wants to see OTIF (on time in full) on their computer screens. An outsource partner makes your delivery network run smoother and ensures the product reaches the consumer faster, thus pleasing all parties concerned.
- Deep experience with food and beverage logistics lets the shipper focus on core business: Putting something in the hands of longtime experts allows you to ease your mind, concentrate on other areas of the business, and consider what could improve your company in the future.
- Scale with you as the company grows: A partnership with a 3PL hopefully means success that can lead to more growth. It can also mean that as you grow, the 3PL partner will be able to come up with more answers when you seek to expand and need greater resources to move forward.
Partner with Port Jersey Logistics for Optimized Food And Beverage Distribution
Outsourcing logistics can have a warehouse full of benefits. A third-party logistics partner like Port Jersey Logistics allows you to streamline your processes, save time and money, and meet your goals. With over 65 years of experience, Port Jersey Logistics is a titan in the food and beverage logistics industry and has partnered with many of the biggest names in the business. If you are interested in partnering with us, visit our website portjersey.com.