Using a 3PL can help companies improve efficiency. No matter how efficient your supply chain is running, finding ways to improve your supply chain is something you should always be doing. Imagine having a partner that will take care of the most complex, expensive and overlapping aspects of your supply chain. Companies that partner with a 3PL enjoy reduced per-unit production costs and increased order fulfillment speeds — all without sacrificing quality.
To meet these logistics and fulfillment demands, third-party logistics (3PL) providers had to prove agility, adaptability and flexibility. Supply chain efficiency is a business’s ability to use resources, technology, and expertise in order to minimize logistics costs and maximize profits. The goal of an efficient supply chain is to save money and maximize profits by optimizing the processes and stages in the supply chain.
What are Third-Party Logistics (3PL) Services?
A third-party logistics service provides various logistic services such as storage, distribution, transportation within the supply chain. In logistics and supply chain management, 3PL refers to an organization’s use of third-party enterprises to outsource distribution, warehousing and fulfillment services.
Companies that provide 3PL services allow various e-commerce business owners to accomplish more with an infrastructure that allows them to finish their retail orders properly and quickly. The organizations that provide 3PL services are a vital part of supply chain management which has helped thousands of businesses worldwide to grow.
The logistics management process begins with raw material accumulation to the final stage of delivering goods to the destination. By adhering to customer needs and industry standards, logistics management facilitates process strategy, planning and implementation.
Which Services Does a 3PL Offer?
A 3PL can handle tasks like:
- Product procurement
- Storage and warehousing
- Inventory management
- Order fulfillment
- Packaging and shipping
- Transportation
- Optimization of fleets and routes
Many 3PL companies also offer other, more specialized services like:
- Freight forwarding: Some 3PLs are also freight forwarders, which means they handle the importing and exporting of goods and products.
- Reverse logistics: Some 3PLs will handle the backwards movement of goods through the supply chain, such as customer returns or products coming back for proper disposal.
The Major Functions of 3PL
- Transportation
A 3PL does more than just book your company’s freight—it acts as an extension of your transportation department. In some cases, the 3PL may manage all of a client company’s transportation functions. A third-party logistics provider will have a complete understanding of a client’s shipping, demand cycle and supply chain. This enables the 3PL to optimize loads, identify efficiencies, forecast freight fluctuations and reduce transportation costs. The 3PL can be a strategic partner that is constantly auditing freight performance, providing greater visibility to a client’s supply chain, and making it easier to spot overspending, delays and other inefficiencies.
- Shipping
Providing your customers with a great brand experience means getting your product where it needs to be – on time, every time, accurately, and cost-effectively. To do this, you need to rely on major shipping carriers. Transportation costs have skyrocketed in recent years, but PFC can help keep those costs in check. Our multi-modal transportation capabilities offer an end-to-end (3PL) third-party logistics management solution for your supply chain and get you the most cost-effective, true transit times for your parcels.
PFC guarantees immediate access to the capacity required to move your products at a moment’s notice. Our efficient operations not only meet your on-demand fulfillment logistics needs, but they also ensure reliable service at a fair price.
- Information Technology
A 3PL often uses information technology to manage ecommerce, customer relationships, transportation, and warehouse operations. Tools like electronic data interchange (EDI), application programming interface (API), and cloud-based systems are the most popular tools trusted by 3PLs. No matter which tool is utilized, the goal is to provide increased visibility to supply chain processes as well as shipments in transit.
What Does an Efficient Logistics Process Look Like?
An efficient logistics process in a business offers unmistakable advantages. It streamlines operations, minimizes downtime, gets products from place to place quickly and adds tremendous overall value. Below are some main benefits of efficient logistics:
- Reduced Costs
Since 3PLs work with many manufacturers and retailers, they can get bulk discounts on things like supplies, equipment, and even shipping costs. They are also experts at streamlining and optimizing the supply chain to keep prices low. While working with a 3PL comes with a cost, it often leads to more cost savings than managing the logistics on your own.
- Increased Customer Satisfaction
Increased logistics efficiency often means improved fulfillment times as well. Customers who receive their orders promptly are more likely to feel pleased with your services. Their increased satisfaction also makes them more likely to become repeat customers. By using your efficient logistics to give your customers exemplary service, you can build an extensive, loyal client base and set yourself up for continuing success and profits.
- Better Relationship With Suppliers
Enhanced logistics also enable you to build enduring relationships with your suppliers. Suppliers want to know that you have the infrastructure necessary to move significant quantities of their products and make your relationship mutually beneficial. By demonstrating your command of logistics efficiency, you make yourself an appealing partner for suppliers and ensure a steady supply of quality products for your clients.
- Stronger Industry Reputation
Logistics efficiency boosts your overall reputation in your industry. You will gain standing with clients, become a more attractive business partner and attract more qualified and capable employees.
Third-Party Logistics Advantages
Consider these pros of third-party logistics, many of which our own customers here at Flex Logistics enjoy.
1. Dedicated Experts
Third party-managed supply chains are specialized. These businesses are dedicated exclusively to the organization, transportation and distribution of physical goods as efficiently and economically as possible — that is, getting materials or finished products from Point A to Point B quickly and cost-consciously.
- Scale Operations and Be More Flexible
When a company uses a 3PL, they can scale space, labor, and transportation according to current inventory. Additionally, they are often able to ease the transition between seasonal periods and industry fluctuation.
When expanding into new markets, businesses can rely on a 3PL to aid growth in new regions. Always looking for ways to improve aspects of supply chains, 3PLs have the tools and technologies necessary to make adjustments that could prove challenging for businesses on their own. Management software can analyze and monitor supply chain procedures to eliminate inefficiencies. Third party logistics providers bring continuous improvements to your logistics process, which ultimately leads to savings and greater efficiency during your logistics initiatives.
3. Simplified In-House Operations
Industry research in supply chain management continually reveals an inflection point once manufacturers and producers hit certain daily outputs — around 20 orders per day. At these levels, it actually costs more to do everything yourself, siphoning resources that could be more strategically allocated into core competencies with a higher return on your investment.
Outsourcing logistics means your organization no longer needs to individually own, pay for and manage:
- On-premise inventory or storage
- Remote or off-premise field staff, such as truck drivers or delivery personnel
- Remote or off-premise fleets
- Broad document-management systems containing end-to-end supply chain documents, invoices, billings, shipping and customs paperwork
4. Saves Time and Money
Using a 3PL can greatly reduce or even eliminate the need to invest in warehouse space, technology, transportation, and employees to carry out logistics processes, allowing for more focus on your core competencies.
Third party logistics providers can also make organizations proactively aware of supply chain mistakes that could be costly and risky. By providing industry forecasting, 3PLs also help optimize inventory levels to save on inventory holding costs.
When working with a 3PL, organizations can save time by receiving the expertise needed to carry out supply chain logistics efficiently.
5. Provides a Competitive Edge
Supply chain logistics can be complex; fulfillment, warehousing, and shipping all come with major challenges. When it comes to supply chain logistics, 3PL organizations are experts and can support customers with years of experience and industry connections to quickly streamline processes. Partnering with a 3PL provider remains an effective supply chain strategy bringing an objective, data-backed competitive edge to your brand.
Working with a third party logistics organization can also relieve the stress of trying to comply with international shipping protocols.
6. Increased Information Technology
Information technology allows tracking shipments, materials and products both on the supply side and the delivery side of the operations. Such systems are costly and need to train technical personnel to maintain and update. Third-party logistics companies can provide you with data on the location of critical deliveries and let you plan your production with more excellent reliability. Tracking deliveries to consumers is more efficient. The resulting streamlined operations put customers’ hands quickly and reliably while allowing quick problem diagnosis and a satisfactory resolution.
The FLEX Logistics Team is Here to Help!
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.