In today’s fast-paced business environment, it pays to have an efficient inventory management system. Unfortunately, not all businesses can meet the monetary and infrastructural demands of running a comprehensive system.
That’s where third-party logistics (3PL) companies come into play. By providing a reliable framework for storing and moving products throughout the supply chain, 3PL companies can help eliminate several bottlenecks in the supply chain, thus enhancing business growth.
In this post, we look at the role of third-party logistics providers, evaluating everything from what they are, what they do, and how they can benefit your business.
What Is Third-Party Logistics?
Third-party logistics, or 3PL companies, are service providers that specialize in handling different aspects of a business’s supply chain and logistics operations. Their services can range from inventory management and order fulfillment to warehouse storage, transportation, and handling returns policies.
That said, it is important to note that not all 3PL companies have the same business model. 3PL companies come in different types and offer varying levels of services focused on different areas of the supply chain.
For instance, most 3PL companies solely focus on arranging logistics services for their clients. As such, some of these companies don’t have their own assets. Conversely, some 3PL service providers offer a more comprehensive solution by utilizing their own assets and infrastructure to fulfill ecommerce needs.
How Can Third-Party Logics Benefit Your Business?
3PL service providers can significantly reduce the burden of running supply chain operations, allowing you to focus your resources on business growth. They can also act as consultants, helping you to set up, run, and optimize your supply chain and logistics processes. Here’s what else 3PL service providers can do for you:
Cost Saving Benefits
Depending on the size of your business and the industry it operates in, supply chain costs can range from 10% to more than 20% of your total revenue. Most of these costs go into transportation and storage. 3PL companies can leverage their vast order volumes to negotiate better rates, leading to lower operational costs.
They also constantly improve their processes, translating to greater business value for their clients.
Focus on Core Competencies
Running a business can be tasking. The sheer number of factors you have to focus on is enough to leave anyone burnt out. However, working with a 3PL service provider allows you the leeway you need to focus on other important business-related issues. For instance, you can save tons of time just by taking transportation workflows off your list.
Access to Expertise
Running a business isn’t just about finding the best products and attracting customers. You also need to be adept in other areas, including inventory management, shipping, logistics, and much more. 3PL service providers are often a collection of numerous experts who bring a wealth of knowledge and experience to the table, streamlining your operations and keeping your processes up to date and above board.
Why You Need to Work With a 3PL Company
Third-party logistics providers are arguably some of the greatest aspects of the ecommerce industry. They help streamline every aspect of the supply chain, allowing business owners to focus on growing their business. They’re also the go-to option for 4PL providers, who broker deals between businesses and 3PL providers.
