In the current business world, partnering with third-party logistics (3PL) companies is on the rise. Almost every big company is associated with a third-party company to expedite the processes involved in supply chain management. Small to medium businesses do not require a 3pl company to handle their shipping operations, and they can appoint a small team to fulfill their requirements. But, you cannot manage the logistics by your own team when you have multiple businesses, and partnering with a 3PL company is the only solution for your businesses. A 3pl company mainly deals with a wide range of logistics operations such as shipping and receiving, transportation, warehousing, and distribution.
Are 3PL Companies the More Economical Options for Logistics:
1. Cost savings
Partnering with a 3pl company can save your operational cost. They help maximize value and eliminate inefficient processes that might arise when operations are handled internally. They have the state-of-art infrastructure, including multiple warehouses, 24×7 security surveillance, best packaging, heavy vehicles, and insurance plans for their clients. They can save your cost and ship your goods with utmost care.
2. Market Expansion
A business can expand manifolds when partnered with a 3pl company. Since, a 3pl company makes management of supply chain operations smooth and manages vital processes like warehousing, transportation, and so on, therefore it becomes easier for a business to explore new domains and emerging markets. You can concentrate on your business and work on your business extension plans. Once you handover your logistic part to a 3PL company, you do not need to invest your valuable time in their transition process.
3. Reduces delivery time and increases customer satisfaction
Customers often get impressed if their orders are timely delivered at their doorsteps. Speedy delivery of product or services attracts new customers, leading to the profitability of the business and an increase in customer loyalty. Therefore, 3pl companies make the expedited delivery of products possible and reduce shipping costs, and ultimately increases customer satisfaction.
Another reason why 3pl companies prove to be a more economical option among other options is that it provides scalability and flexibility according to the business needs. Therefore, it adjusts itself with the demand and supply, and no additional costs are incurred in this process.
5. Increased focus on core competencies
Supply chain management involves several intermediate steps which if taken into consideration by the business itself, might lead to a shift of focus from its core competencies to the non-core ones. Hence, it affects the performance of the business. Therefore, a 3pl company can reduce your burden and you can concentrate on the core competencies of your business.
6. Capital investments
3pl companies are responsible for the maintenance of warehouse facilities and order management. Hence, the business doesn’t need to any additional amount on these fields. Your logistic partner will collect the orders on your behalf and deliver the same to your clients according to their needs.
What are the disadvantages of hiring a 3PL company?
However, there are some disadvantages of partnering with 3pl companies that should be taken into consideration as well.
1. Loss of control
While partnering with a 3pl company, a business entrusts it with the responsibility of the entire supply chain operation. It depends on the performance of the 3pl company whether it will lead to customer satisfaction or not. Therefore, it leads to a certain amount of loss of control on the part of the business.
In-house logistics enables communication with the people involved in supply chain operations. Therefore, if any specific requirements are needed to be fulfilled, communication can be done directly with the in-house team. But in the case of 3pl companies, it is difficult to communicate if any specific requirements arise.
Partnering with 3pl companies can be extremely beneficial for a business in the long run but you need to consider the above pros and cons before you choose the best company.