Use Third-Party Logistics to Improve Your Supply Chain

A powerful Third-Party logistics (3PL) is so important to any supply chain execution and has many benefits, including access to expertise and industry experience. However, the challenge is always the way you can choose the right 3pl and know the kind of benefits you’re likely to get from it. We will look into all that, but first, let’s get to know what a third-party logistic is.

What Is 3PL?

A 3PL is a service, which enables you to delegate the functional logistics. Right from warehousing, to transportation to delivery of the goods. Hence, allowing you to concentrate on other business issues.

A third-party logistic firm offers several supply chain logistics services. Including warehousing, picking, and packing, packaging, freight forwarding, order fulfillment, and transportation.

What Are the Benefits of Third-Party Logistics in Supply Chain?

Third-Party Logistics companies particularly handle logistics, and hence have wider networks compared to the supply chain function of the company. They can be influential during negotiations in the logistics sector because they enjoy exceptional relations within it. Furthermore, they can help you to provide your clients with enormous volume discounts. The above can greatly reduce your overhead expenses.

By engaging a third-party logistic company to manage your supply chain, you can surely reduce infrastructure costs. Because it offers you warehousing, transportation, and tracking services among others.

Here are the benefits.

Access to Expertise and Sector Experience

In the current complicated global market, it isn’t easy to predict and include inner expertise in all the needed abilities and areas. A Third-Party Logistic(3PL) service firm has a better understanding and is experienced in issues including export and import, documentation of transport international compliance as well as economic restrictions. Companies eyeing global markets can profit from the logistical help and knowledge that can be offered by their partners. Hence, minimizing the cycle time, and expensive delays as well as easing access to new areas.

Concentration on Key Competencies

Rather than engaging in the administration of less important but necessary tasks, handing over logistics will allow your company time to handle key competencies. As well as benefit from the logistics expertise without involving inner reserves.

Flexibility and Scalability

Third-party logistics gives businesses the much-needed scalability and flexibility to use supply resources depending on the existing business requirements. So that whenever demand is high companies can scale up and when the sales are low, they don’t have to incur unnecessary costs.

Business Growth and Market Expansion

In the supply chain, the work of a 3pl is to enable business growth by helping companies to access new markets. Without necessarily straining to learn the new market’s nuance of logistics, or spending cash on labor, equipment, and warehouse too.

Enhanced Customer Satisfaction

The above-mentioned benefits of Third-Party Logistics will result in enhanced customer services, reliable delivery, brand awareness as well as improved response time. Leaving your customers more satisfied, which is among the main targets of any business.

How to Choose the Right 3PL Company

Before choosing a 3PL company for a supply chain first:

Specify and document your Third-Party Logistics needs and the anticipated outcomes.

Survey the ability of your preferred 3PL company to scale up and customize.

Talk with other companies and customers for their reviews to ascertain the credibility of the 3PL firm.

Third-Party Logistics ( 3PLs) FAQs

According to Search ERP, these are the regularly asked questions about 3PLs and their best answers.

What is a 3PL?

Third-party logistics providers ( commonly called 3PLs) are companies that offer outsourced logistics management services. 3PL providers will handle almost any task related to getting a finished product to its endpoint. The most common 3PL service is the transportation or shipping of packages, pallets, storage tanks, or other units from a manufacturer’s warehouse to the customer.

A 3PL’s usefulness is not limited to transportation, however. For instance, most 3PLs will also provide outsourced warehouse management, order fulfillment, off-site storage, and inventory management services. Additionally, 3PLs will sometimes provide reverse logistics management. This means, the reuse of materials and products through refurbishing and remanufacturing or, if reuse is not possible, the proper disposal of these items. 3PLs also often provide freight-related services, such as freight consolidation and inbound-outbound freight management.

What are the benefits of using 3PL services?

The major benefit of employing 3PL providers is that the manufacturer doesn’t have to shoulder the burden of coordinating, staffing, and tracking the transportation end of the supply chain. Besides the basic physical necessities like trucks, ships, drivers, and increasingly expensive fuel. 3PLs also offer to track software that necessitates greater visibility into the shipping process. The scope of that visibility relies heavily on whether the 3PL works at a national or international level, so manufacturers should pay close attention to geographic reach before hiring a provider.

The supply chain visibility provided by 3PLs comes from real-time tracking technology, such as radio frequency identification (RFID) or global positioning systems (GPS). Such technology allows manufacturers to log onto an online portal and see the exact location of a shipment at any time. It also alerts them to any bumps along the way, including late or damaged shipments, giving them the time to react as setbacks happen, rather than afterward. On the consumer side, real-time visibility means that customers also have access to the status of their orders, including any updates to the estimated time of delivery.

How should manufacturers select 3PL providers?

There are a few points that manufacturers should investigate before selecting a 3PL. First off, it’s critical to ensure that the 3PL provides the shipment modes, containers, and vehicles needed to properly store and transport the kinds of products made by the manufacturer. Food and beverage manufacturers, for example, need temperature-controlled freights, which may not be available from every 3PL provider.

Second, cost comparisons between 3PLs are important to ensure that at the end of the day, the manufacturer is saving as much of its transportation budget as possible. After all, the total savings from using the 3PL should be significant enough to warrant bringing a third party into the supply chain.

Last, but certainly not least, is the technology check. Not every 3PL will have the most cutting-edge real-time devices installed on their vehicles, so check up on what each provider offers in RFID or GPS. Additionally, make sure the provider offers supply chain systems integration, which means it provides manufacturers access to information on the shipping process that can be shared with suppliers and customers.

Are 3PLs worth the cost?

The value of a 3PL lies in how much easier it makes life for its manufacturing customers. Hiring a 3PL should certainly result in cost savings, but it should result in time and energy savings, as well. The 3PL should be able to handle the job with minimal action on the manufacturer’s part and be easy to work with. There are always risks or complications involved in bringing an outside party into the supply chain. Ensure that the 3PL is listening to specific customer requirements, providing the most accurate shipment tracking technology, and freeing up time for the manufacturer to pursue innovations.

Why are Third-Party Logistics Significant and When Should You Utilize Them?

Third-Party Logistics firms can provide detailed logistics remedies for your supply chain. You can utilize them to get into new markets, broaden your customer base, and establish satisfactory customer service.

Whereas according to the EC group, the following are the commonly asked questions about 3PLs and their respective answers.

1. What specialist services do a 3PL offer?

Many services can fall under the 3PL umbrella including order processing, pick and pack, warehousing and inventory management, national and international distribution, reverse and return logistics, IT tracking and reporting, and customer service and response handling.

Be sure to check that the 3PL you’re looking to use has the right skill set and scale to meet your requirements.

2. Is outsourced logistics right for my business?

Many businesses benefit from outsourced logistics. Is managing costly inventory storage space a problem? Do you see spikes in activity that are difficult to manage? Are you concerned about the operational efficiency and cost of your current operations? If the answer to any of these questions is yes, it is time to speak to the experts.

3. What industries does a 3PL generally serve?

Some 3PLs specialize in specific sectors, e.g. chilled products, pharmaceuticals, or foodstuffs, and can offer niche add-ons such as flow-wrapping or bottling to complement their offer. At EC Group we handle a wide variety of ambient products including books, clothing, campaign and promotional collateral, exhibition materials, perfumes, and toys.

Our clients come from sectors including automotive and transport, agency, advertising, and sales promotion, banking and finance, charity and not-for-profit, eCommerce, education, healthcare, regulatory, retail, environmental, and luxury goods. Our commitment and knowledge allow our clients to focus their valuable time and resources on their core activities and day-to-day business, confident that their customer service, logistics, and fulfillment are in safe hands.

4. Can a 3PL offer an eCommerce solution for my business?

The boom in eCommerce has dramatically altered the logistics industry. Not all 3PLs are experienced or competent in handling the challenges associated with end-to-end eCommerce fulfillment. EC Group offers professional customer services and a secure eCommerce capability combined with expert warehousing, pick and pack, mail order fulfillment, comprehensive reporting, and a commitment to meet the most rigorous service level agreements.

5. How long does it take to implement a 3PL solution?

Implementation times will be influenced by several factors including scale, complexity, and the time of year. A very simple one-off distribution solution can be implemented in a few days. A more complicated ongoing fulfillment solution can require six to eight weeks. Bear in mind that it’s unlikely that implementation can be undertaken in the period leading up to Christmas as most 3PLs will be pretty much flat-out during that period.

6. What specialist services does a 3PL offer?

There are many services that can fall under the 3PL umbrella including order processing, pick and pack, warehousing and inventory management, national and international distribution, reverse and return logistics, IT tracking and reporting, and customer service and response handling.