Gone are the days when one company catered to all segments and processes involved in a supply chain. It’s the era of micro-level specialisation in which the more popularised and optimised way of going about any process in a supply chain is outsourcing.
Logistics are pivotal to supply chain management, a step which, when outsourced or handed over to third parties, will transfer the entire responsibility from procurement, warehousing, to fulfilment activities to those vendors.
The simple idea behind this is that logistics is not the primary focus for most companies. They may or may not manage it as well as specialised, third-party logistics providers.
That way, whether you’ve got a business idea or an idea up for manufacturing, you can leave the logistics to the experts and completely focus on where your expertise lies.
To help you understand the expanse of advantages that 3PL brings along, we’ve highlighted the top benefits for you.
You must not go wrong with cost curtailment. Almost every project in this world is on a tight budget. However, slashing costs in the wrong places can do more harm than good.
Opting for 3PL gives businesses some room to breathe by eliminating infrastructure, transportation, personnel, utilities, and several other maintenance costs involved in logistics. This is replaced by an uncomplicated fee you pay to the 3PL team you hire, and the difference in the two calculations is drastic.
With 3PL, your company or business gets an undeniable global advantage and the potential to scale to greater heights and distances. It gives you the flexibility to expand your logistics network across borders and facilitates offshore outsourcing, which relatively saves incredible percentages of costs.
Furthermore, third party logistics is your insurance to bad times in business as it completely customises the utilisation of resources based on current business needs.
This one’s probably a given; if a business opts to transfer logistics to third-party providers, it hires a team of highly skilled professionals with an unparalleled experience that the best in the industry will bring along to the job. This way, you can make sure there are no loose ends; each pillar that supports your venture is rock solid and fits right in place.
Optimisation of business practices with the help of 3PL is pretty similar to how we do our SWOT analysis. You utilise your strengths to the best of your capacities, find ways to eliminate weaknesses, and exploit opportunities.
Your primary business is your strength, your core competency. By eliminating your possible weakness of a lack of resources to manage logistics or by exploiting the opportunity of doing far better at logistics with the help of 3PL, your business can reach its full potential and productivity.
Now that we have covered the four primary benefits let’s cater to this one objectively. With close to all logistics-related responsibilities handed over to professionals in the field, and close to all logistics centred expenses slashed out, exactly what risks are we left with, and how much cash flow do we save up on? Hardly any, and quite impressive amounts, respectively.
That’s how helpful a third party logistics model can be for a company when done right. Choosing the right provider and agreeing to a mutual consensus with regards to the terms and conditions of both parties lies at the core of a beneficial client-3PL provider relationship.