What are the advantages of third party logistics?
If your business is ready, there can be many. Working with a third party logistics service allows you to streamline, scale and save, both in terms of money and time.
But, you are probably wondering exactly how this is achieved. In this article, we explore some of the potential advantages of using a third party logistics provider, including:
- The opportunity for scaling up
- Access to expertise and efficient processes
- Lower delivery costs
- Improved customer experience
- Optimised inventory management
Want to know more? Keep reading to find out the key reasons why so many businesses are using third party logistics…
1. Scalability for your business
So, say your business is growing and you’ve invested in a new warehouse that fits your budget. You’ve hired new staff to run your logistical operations – perhaps you’ve even paid to train them. You’ve identified your best delivery options and set up your supply chain to suit.
What next? How do you scale up your business from here? No doubt, the infrastructure you have put in place will need to be reviewed when you take that next step up. Staff may have to come and go; you might even find that your new warehouse just isn’t suitable anymore.
This is why many businesses with plans for growth use a third party logistics provider. One of the main advantages of a 3PL is the flexibility when it comes to business scale. If your business sees a sudden surge, you will have the capabilities to deal with increased orders and storage. Similarly, if you experience a dip in sales, you won’t have to worry about seeing any investments go to waste.
Basically, you won’t be restricted by a lack of resources – your business can grow at a healthy, scalable pace that is primed for long term success.
2. Access to expertise and efficiency
This leads us onto our next point. Many businesses choose to use third party logistics because they just don’t have the knowledge themselves or within their business. It’s likely your passion is for your product and the industry you operate within – not necessarily about logistical compliance laws and policies.
An advantage of using a third party logistics company is that they know exactly how to handle every part of your supply chain – from the health and safety regulations in their warehouse, to EDI compliance regulations.
Not only this, but years of experience in delivering the best supply chain management services means that a 3PL may have solutions to your problems that you would never even have thought of. This means you encounter fewer problems in your delivery chain, and when you do, they are ironed out quickly and efficiently.
At the same time, while your 3PL provider deals with your supply chain management, you are free to apply your own expertise to the relevant part of your business.
3. Best value delivery costs with top couriers
What business doesn’t like to save money?!
A huge advantage of third party logistics is the potential for cost savings. If you think that working with a 3PL will be too expensive, consider the areas where money will actually be saved, such as:
- Lower delivery rates – most 3PL’s have access to lower shipping rates due to the volume of orders they place.
- Warehouses – finding a suitable and affordable warehouse can be a difficult and time consuming task. A 3PL company has one ready and waiting.
- Staffing – again, providing your own warehouse and logistics team is a huge undertaking. If your staff leave or need time off, this could result in financial loss.
Instead of investing your money and time into these areas, a third party logistics provider can handle them much more cost effectively. You’re also less likely to waste money when things go wrong, plus, any savings you do make can be put to use in other areas of your business.
4. Improved customer experience
What is the most important element to any business? The customer.
If your customers aren’t happy, then your business is likely to show the strain of it. If you choose a 3PL that really understands the importance of customer service, then you’re sure to reap the rewards in the form of good reviews, repeat orders and strong recommendations.
Think about this – how easily could you fulfil the following without using third party logistics?:
- A range of delivery options at different prices with varying transit times?
- Free next-day delivery at an affordable cost to the business?
- Swift and efficient free returns and exchanges?
These things are not only expected by customers, but are some of the key issues they keep in mind when choosing where to make their purchase. For example, 67% of shoppers consider easy returns as a big draw when making a purchase online, while a huge 88% see free shipping as more important than fast shipping.
If your competitors are offering these things and you are not, it might be worth seeing if outsourced logistics can help you get back on top.
5. Optimised inventory management
An often overlooked advantage of third party logistics is the opportunity to optimise your inventory management. While logistical functions and transport management are often the main reason why businesses use third party logistics, there is much more to be achieved.
Most good third party logistics companies include inventory tracking and management software that integrates seamlessly into your existing sales platform. This can include real-time inventory tracking, giving you the most precise view over your orders possible.
With these tools available, you can analyse and optimise your business according to these new insights available to you.
Even better, as you will have saved time by outsourcing your logistics operations, you will be able to implement any improvements much easier.
PS, Want to know more about the advantages of third party logistics? Contact 3PL today for a chat about how using third party logistics could benefit you.