10 Efficiency Benefits of Third Party Logistics
One of the most costly aspects of running a business is order fulfillment and shipping. It is important to make sure you are spending wisely when executing your fulfillment and supply chain management strategy. One of the steps to take to ensure you are maximizing your budget, and operating your organization more efficiently, is outsourcing fulfillment operations to a third-party logistics or 3PL provider. Here are some ways that outsourcing third party logistics services can save money and make your organization more efficient. Read More.
1. Reduce Capital Investment
While it might make sense to operate your own warehouse, manage the inventory and fulfillment operation yourself—ultimately it can be a very expensive undertaking. The cost of security, labor, rent, materials, and logistics— among other things will drain resources from your core business operations. Put the capital you’d spend on an internal operation into a 3PL service
2. Seasonal Flexibility
Chances are, you experience frequent spikes in sales activity throughout the year—whether it is due to seasonality like the winter holiday rush, or special promotions. With these spikes comes the need for extra staff to expand your fulfillment footprint. At the end of these seasonal growth spurts, you’ll have to let the extra staff go. A good fulfillment partner will have the means to scale both up and down to meet the unique needs of your company, and you won’t have to absorb the additional labor costs for hiring and layoffs.
Many in-house fulfillment operations ship from one location. Depending on where your customers are located, distributing from just one location increases time to destination. Increased time to destination, increases the cost of shipping. Since 3PLs operate multiple, strategically located fulfillment centers, their greater reach can drive down your overall shipping expense.
The relationship between 3PL and shipping is strong. Knowing the best carriers for specific delivery locations, sales channels, and times of the year is what third party logistics providers do best. Because they are shipping thousands of orders from multiple companies a day, a 3PL has the scale to negotiate discounted rates with many of the largest shipping carriers. Just a small amount of savings per package may seem insignificant, however, saving on transportation adds up as your business grows.
The various equipment required to run an order fulfillment operation carries unforeseen costs. From pallets to forklifts, and conveyor belts to barcode scanners, warehousing equipment costs quickly add up. And it’s not only the upfront costs of purchase but the ongoing cost of service and maintenance. 3PL outsourcing will connect you with a team of experts who have all the necessary equipment on hand so you don’t have to worry about buying and maintaining your own.
6. IT Capabilities
Order fulfillment requires a lot of hardware and software to ensure it runs smoothly. When partnered with a 3PL, you won’t have to purchase physical hardware, servers, or software subscriptions. A 3PL will have a warehouse management system (WMS) and an inventory management system (IMS) in place. You’ll also save on employee training costs, as well as the purchase of necessary and periodic software updates. These, and custom systems integration work, are all included when you work with a 3PL partner.
7. Warehouse Safety
There are numerous health and safety compliance standards that need to be addressed when running a warehouse. This includes training, certifications, and equipment that must be kept up to date—requiring extra costs. Warehousing also requires a considerable amount of time, pulling your staff and away from core business activities. Logistics outsourcing provides you access to third party logistics service experts, existing safety infrastructure, and the ability to maintain all workflows while doing the necessary safety updates.
Your business is meant to solve a problem or meet a need in the market. Your time and energy can be occupied by more productive things than learning logistics management. Having a true 3PL expert on your team, who knows logistics inside and out, is probably the biggest value-add to outsourcing. 3PLs are fully equipped to handle logistics and fulfillment in the leanest, most cost-effective manner possible.
9. Customer Satisfaction
Taking on fulfillment issues, shipping errors, and daily logistics operations tasks spread your staff incredibly thin. This may cost your company loyal customers and profits. Satisfaction is paramount when it comes to retaining existing customers and growing your business. Logistics outsourcing will eliminate the simplest mistakes— missed or late deliveries, incorrect orders, mixed-up labeling, and more. When these issues are reduced, your company is more likely to realize increased customer satisfaction, which is one of the greatest benefits (and money makers!) you can hope for.
10. Opportunity Costs
If you are managing the complexities of your own fulfillment and logistics operation, time and focus is being taken off core business responsibilities. Being able to delegate fulfillment to a 3PL not only frees up capital that can be reinvested into your business, it also allows your talent to concentrate time and energy on what you do best.
Chose the Right Third Party Logistics Provider
Handling order fulfillment can be a time-consuming and costly undertaking if you choose to go it alone. However, if you choose the right fulfillment and third party logistics provider you will realize savings in multiple ways. Outsourced logistics will save you time, which can be better spent elsewhere. The talented 3PL team at BR Printers is ready to build you a fulfillment solution that delights your customers and saves you time, internal resources, and money. Contact BR today!