What are the benefits of a 3PL for your business?
The substantial growth in e-commerce is looking to outpace retail. The capability to provide efficient online order fulfillment is more vital more than ever. Retailers are meeting customer expectations of better delivery with free and/or next day delivery. Retailers with brick and mortar stores are struggling to adapt to the click and collect models. Suppliers performing direct shipments to customers have trouble meeting the requirements of Service Level Agreements (SLAs). To ensure your profits and ensure your business success, you need to increase throughput, reduce errors and minimize costs. If you re struggling with warehousing your own inventory, maybe it is time to let someone else do it. Is it now time to outsource to a 3PL partner?
What does Third Party Logistics mean?
Third Party Logistics (3PL) providers operate differently from a standard warehouse. The primary difference is that 3PL’s do not own the inventory. Since the inventory they store is not theirs, the operation is really performing services not selling goods. This mean that software to manage the operation has to be different. Critical to how it is managed is the separation and identification of other people’s stuff.
Since selling services, each step needs to be properly executed, recorded and billed to the customer. Since 3PL’s profits depend on efficiency, they have driven their cost structure below many companies who chose to do their own warehousing.
3PLs have to handle each customer based on their unique needs. What works for one customer, typically will not for all. They are prepared to offer different handling and invoicing requirements per customer. The inventory is typically available online for a customer to see. When required, they are ready to rapidly push through your orders on demand.
Most 3PL’s use a professional Warehouse Management System (WMS) that has the flexibility to handle all the unique requirements of each customer. It also ensures the tracking of all processes and goods. It has rules in place to treat the orders from one customer’s transactions different from another. Specific instructions need to be set up for handling, picking, staging and shopping for each individual product. Overall, it helps to maximize efficiency, giving you the confidence that your product is secure and is available for rapid responses.
Why go with a 3PL?
Companies will choose to go this route as opposed to making the investment of this scale to run such an operation. Often, there is a better degree of expertise available at the 3PL that manufacturers cannot match. Large companies find splitting up different product lines to different 3PL’s make sense because the products require completely different handling and processes.
Often larger companies are struggling with large-scale warehouses and old software that upgrading is too time consuming, costly or they cannot afford the down time required change out systems. Outsourcing to a 3PL also gives you more exact and finite pricing to factor into the cost structure of products and your business. There is a lot of benefits to outsourcing to the professionals.
3PL’s allow companies to expand their operations with the capital investment. Many companies could grow their business if they had the space to do so. Finding real estate is becoming more difficult and costly. In addition, getting the build completed with contractors, racking, software and equipment takes a long time.
There are also startup companies that do not have warehouses yet at all. Many eCommerce businesses have implemented the 3PL model and taken advantage of it to be able to expand their current business. Small businesses have also gained better flexibility to reach more consumers globally. Going with a 3PL could give your company an opportunity to grow otherwise not available.
Benefits of using a 3PL partner
An established 3PL partner can help you to connect all the dots within the supply chain. If you are a manufacturing, they could deal with both raw materials and finished goods, which typically require different processes and handling. 3PL’s often help you with specialized shipping such as same-day delivery, express and free shipping. Many offer special packing, labeling and product expiry management. This could give your business a competitive edge.
3PL Partner come in sort shapes and flavors to serve all consumer needs. Whether your needs involve cold storage, bulk storage, outdoor storage, indoor storage, fragile goods, liquids, discrete manufactured products, process manufactured products, etc, there is a 3PL for you. If not, there is a business opportunity for you. You can even use multiple 3PL’s to handle all your different needs and ensure you achieve continuous growth. They key is that they are fully automated with a solid barcode system and software that tracks everything along the way. Overall, you should be able to find whatever you need.
You will achieve higher customer satisfaction and loyalty. The eCommerce sector has become more competitive. Consumers now expect better delivery of products. Having the correct 3PL partner can help meet these expectations, delivering before projected dates. Order fulfillment will ensure consumers will return to your business in the future.
Conclusion
3PL’s are becoming more popular in industries including importers, distributors, manufacturers, healthcare and government. Many have realized that becoming an expert in warehousing, starting or maintaining warehouse operations and making the investment in a proper warehouse system is not for them. Having the right people, places and systems to execute the vital functions of storing and moving goods in a timely manner is crucial to business visibility and customer satisfaction.
About ProVision WMS
ProVision WMS is a versatile solution which provides the tools to manage and co-ordinate warehouse operations. It improves order fulfilment, customer service, labor output and decision-making. This software, along with complementary technologies, will save you money and pay for itself in a short period. It has the flexibility to handle diverse applications requirements and help your business grow. To learn more about ProVision WMS solutions or how we can help to achieve all your business goals, request a demonstration today.
