In broad terms, a third-party logistics (3PL) provider is like a helping hand. When you’re overwhelmed by an overabundance of tasks or need an expert to untangle a complicated issue, 3PLs can be just the ticket. A 3PL logistics provider allows a business to outsource shipping and fulfillment services and helps support some or all aspects of a shipping operation, from start to finish, if necessary. Services can include transportation, warehousing, payment, and materials procurement, among many others.
Two of the greatest benefits of using a 3PL provider are those mentioned above. First, a 3PL can take over a process when you are swamped and don’t have the personnel to handle the problem, or it can assume a needed role when you want your employees to focus on other assignments. Second, a 3PL can provide you with staff that might have more knowledge and connections to help you deal with a complicated project that needs a more expert touch. This blog examines some of the other facets of using a 3PL and looks at what attributes make a particular 3PL right for you.
Streamlining the Supply Chain
Many of a 3PL logistics provider’s services deal with streamlining vital supply chain operations or responding to challenges in the movement of products. Let’s look at the key places where 3PLs can step in.
A 3PL provider can take responsibility for the actual transport of shipments. For instance, a 3PL can manage an inventory shipment between a company and a buyer or leverage other transportation companies to complete the task for their partner. 3PLs can also help consolidate less than container load (LCL) or less than truckload (LTL) freight and track payments and insurance documents. By working with a 3PL, companies can lower their transportation costs, make their operations more efficient, and have allies to help when there are roadblocks.
With a 3PL as your partner, the need to invest in warehouse space can be significantly reduced, perhaps even eliminated. Warehousing 3PL providers, a common type of third-party logistics provider, can be integrated into a company’s warehousing and transportation procedures. Some 3PL providers offer ways to customize managing all facets.
3PLs also offer a variety of distribution and wholesale services. These services include outbound order fulfillment, picking and packing, custom labeling, and manufacturing. By outsourcing distribution to 3PLs, companies — especially small ones — can keep from straining their resources and workforces to the point where it can become detrimental. Distribution patterns change just about every year — a distribution center can shut down, or customers want shipments sent directly to retail locations — so having a partner that can easily overcome those changes is vital.
In-house Logistics and Infrastructure
With most 3PL staffing logistics technology experts, it makes it extremely easy to go with a 3PL. That and the ever-increasing costs of running an in-house logistics operation make 3PLs an ideal solution. This approach allows a company to shift staff and resources to areas such as manufacturing, strategic planning, and operational processes that better enable and encourage growth in the company.
Increasing Flexibility and Scalability
Entering the world of 3PLs also gives companies flexibility and scalability that are much harder to attain when relying solely on in-house operations. With a 3PL provider, you can allocate supply and distribution resources based on the current business needs. For example, if sales are down, there are no expenditures on underutilized in-house resources and workers. Conversely, when demand surges, enterprises can be upscaled much easier.
Using a third-party logistics provider opens up a world of ways to reduce costs. Some of them have already been mentioned in this blog; others are less obvious but are worth taking a look at:
- Leveraging the 3PL’s economies of scale: With a 3PL on your side, you have many more ways to scale your company in whatever areas suit you. 3PLs allow you to scale space, labor, and transportation per your current inventory. When the industry fluctuates, or your product goes through seasonal periods of ups and downs, 3PLs can usually ease the transition. This extra assistance can save you money because there is no excess spending on resources when sales take a downturn.
- Avoiding the need for capital investment in logistics assets: A capital investment that was once needed to set up and run each operation in your logistics chain is no longer a factor when you use a 3PL provider. At the same time, 3PLs are regularly investing in new technology and other ways to keep their services competitive. Your company is no longer saddled with aging technology or forced to buy updates.
- Increasing efficiency and minimizing waste: With the knowledgeable guidance and connections of a 3PL, there is less chance of communication breakdowns or misunderstood directions leading to inefficiency. Fewer chances of losing or damaging your product also help minimize waste. When sales are waning, you do not have a workforce waiting for the market to pick back up, and you do not have resources going unused and taking up your storage space.
Improving Responsiveness to Customer Demands
When it comes to pleasing customers, 3PLs can help you in many ways because both the scope and speed of third-party logistics providers are substantial. There are three main areas that 3PLs can help you.
- Enhancing delivery speed and reliability: The demand for things has definitely hastened in the past few years. Customer fulfillment is certainly no exception. They want their products delivered sooner. With the myriad options a 3PL provider can offer, there are plenty more ways to find the quickest route to getting the product there on time. Also, 3PLs can quickly weed out unreliable companies thanks to their knowledge of shipping partners.
- Offering a more comprehensive range of shipping options: There can be a lot of variables in shipping a product — the size and weight of a shipment, when it needs to get there, and where it needs to go are just three of them. So having a greater number of options that 3PLs can offer means those variables can be taken into account more to find the ideal one.
- Providing better tracking and communication: Automated solutions, especially for direct-to-customer orders that want same-day or next-day delivery, are becoming a major part of the shipping process. Real-time visibility and tracking of the orders means all partners, including the end customer, can stay apprised of the product’s location at all times.
Choosing the Right 3PL
Deciding to go with a third-party logistics provider is clearly about what it can do for you and whether it is worth what you spend on it. If both fit your plans, then there are three main areas you need to consider to make sure you choose the right 3PL.
Aligning With the Company’s Values and Goals
To choose the right 3PL, you must first know what you want out of the partnership and where you are going with it in the future. Do you want to have many or all of the supply chain segments taken over by a 3PL? Or do you want the 3PL to focus on a specific aspect? For the latter, look for a 3PL that specializes in that aspect. Another question is, are you expecting to expand? A 3PL provider needs to have the resources to support that possible growth. Will they keep up with all the technological and logistics advancements you will need in the future?
Evaluating the 3PL’s Expertise and Resources
This is one of the most crucial areas to make sure the 3PL you pick is up-to-date. The reason you are doing this is to help you smooth through the obstacles that come up in the supply chain. The 3PL’s knowledge and experience must be top-notch to be a contender for your business. The same holds true with the resources they use. Make sure they are using the most effective and state-of-the-art equipment and processes.
Negotiating and Managing the Relationship With the 3PL
Not to be lost in all the other important factors considered when choosing the right 3PL, your provider needs to be a partner you can work with without problems. You can negotiate with them without there being any tension or animosity. Help them understand your needs and make sure they are willing to make adjustments that suit what you are looking to do. This is a deal you are making with a 3PL, but it is still a partnership that both sides need to work together to provide the best possible service.
Port Jersey Logistics Can Give You the Experience You Need
Bringing in a third-party logistics provider can be a very fruitful move for your business. The benefits are many, and your headaches are fewer. With a 3PL provider, you can gain expertise, an extensive network of connections, and a more streamlined and efficient system for moving your shipments. If you pick the right 3PL, you can also have the flexibility to change if your business is booming or waning. You want a partner with the type of experience that will help improve your company. From that standpoint, there couldn’t be a better choice than Port Jersey Logistics. Port Jersey Logistics, a family-owned business with almost seven decades of experience, is unquestionably a leader in the logistics field, specifically in providing solutions for the food and beverage industry. To get to know us, check out our website today.