Deciding when to use a 3PL can be a difficult decision, especially when the benefits aren’t entirely known. In this blog, we will highlight 5 of the biggest reasons to consider using a 3PL for your business.
A 3PL Allows You To Cut Back On Excessive Spending
One sign a business may want to consider partnering with a 3PL is when excessive spending with little return becomes more than just a one-off occasion. When you work with a 3PL, you are also signing up for their knowledge, experience and understanding of markets, this can all transfer to more money saved in your pockets.
For a business finding themselves needing to cut back on excessive spending, there are several areas a solution can be found. The cost of staff, location and warehousing, technology, vehicles, and rent.
When you partner with a 3PL, the majority of the above are removed from the equation as a 3PL will usually provide their own. These are included in your 3PL fees. So instead of paying rent on your own warehouse, hiring and paying your own warehouse workers and drivers and acquiring technology licenses, this is handled and priced by your 3PL.
Having one fee for all your needed services handled by a partner allows you to understand where your money is going.
A 3PL partner has the ability to offer far more competitive rates on warehousing and storage compared to renting or buying your own facility. This can save money in the long run as you only pay for what has been agreed to be used. This is an ideal solution for businesses that are just starting out, or who have had trouble with changing markets.
Working with a 3PL can allow you to save money and cut unnecessary costs by utilizing their staff and resources. While some 3PL fees can be expensive and intimidating, the costs saved through not owning a facility, vehicles, staff and more can be evident in the long run.
A 3PL Can Help Cut Down On Order Times
Another area businesses can struggle with is competing with more established companies that offer expedited and fast shipping as a standard. This can be especially hard to compete against when a company is only just starting out and can not afford to pay the additional premiums to expedite shipping to its own customers. Alongside, the speed of distributions or shipping, the reliability and accuracy of picking and packing orders can delay and extend already long delivery periods.
A 3PL can assist with both these issues through their own in-house pick and pack teams as well as their own delivery vehicles or relationships with other vendors.
When working without a 3PL it is likely that employees are running multiple roles at a time. In fact, in many startups it is not uncommon for what little staff there is, to be doing everything from finances to delivery. When you partner with a 3PL and outsource the order management and order preparation, you are handing the job to the 3PL’s experienced and efficient team and freeing up your own team for other key tasks.
These teams are hired to do their one job and dedicated their time to execute it. Following the 3PL’s processes, these employees can accurately and quickly prepare new orders for delivery on the same day.
A similar solution is available for the actual delivery. Since you are one of many customers of your 3PL, they have many trucks in their fleet, each with its own roles and routes. To save money for their clients, a 3PL way loads multiple companies' products onto one of their vehicles if the destinations are the same, or along the same route. This reduces the prices for many businesses as they're splitting gas, repairs and driver pay.
3PLs Are Perfect for Expanding Into New Markets
Another area where businesses should consider 3PLs where a 3PL should seriously be considered is when a company is considering opening up and expanding into new markets. This can be new physical markets, or a new product onto the market.
It is very likely that whatever area or a new product you wish to bring out has already been experienced by your 3PL.
Because a 3PL can manage hundreds of clients in a year, they are always learning and adapting to best help their clients. This can result in a 3PL inadvertently gaining experience in a new geological market or product type. Even if your product is never been before seen, your 3PL likely has a good frame of reference on it that can base decisions when they plan with you.
3PLs Provide Scalability
Scalability is one of the biggest benefits and reasons for working with a 3PL. Scalability is crucial for every business. The ability to meet consumer demand at its highs and lows, and not go under is key to ensuring your business stays alive.
Working with a 3PL for its scalability is hugely beneficial, not just for their experience. A 3PL understands the shifts and drops of markets, and as such can be extremely flexible with their services.
For example, a company that uses a 3PL for its ice storage and distribution will have far less business in the winter months but will still need some level of service. For this example, a 3PL may agree at the signing of their contract, that during peak season, the ice company has 200 pallet positions but during the off-season, that number is scaled back to 50. This means that the ice company does not have to pay their peak season storage rates during their slowest time.
In contrast to the above example, if the ice company was renting its own facility, no matter the season, it would have to pay the same amount in rent and fees even in their off-season making a fraction of its peak.
This lack of scalability can be a huge financial burden on many businesses and so that is why partnering with a 3PL can often save you more through its scalable services.
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