Looking for an advantage over your competitors? Outsourcing your logistics needs to a third party logistics (3PL) provider can give you access to a wealth of resources and expertise, freeing up precious time so you can focus on your core business. 3PL providers give you an all in one solution, removing the need to invest in warehousing, technology, distribution vehicles and the staff needed to run the whole process.
Types of 3PL providers
Before shopping for a 3PL company there are few things to consider. All 3PL providers aim to efficiently and cost-effectively manage their client’s logistics and supply chain needs but they achieve this in different ways. There are two broad categories – asset and non-asset based 3PL. Let’s break down the pros and cons of each to assist you in choosing between the two.
Asset based 3PL
These logistics providers own all or most of the assets needed to keep the wheels turning throughout a client’s supply chain. When you select an asset based 3PL you know that your logistics needs are taken care of by one company, giving personalized service. Because the assets are held in-house they can often negotiate a lower cost to their clients and at any time you have the advantage of being able to visit and see the work in progress. Some asset based providers however, may favor the continued use of their assets even if it is not the most cost-effective way to run your supply chain.
Non-asset based 3PL
A non-asset based provider doesn’t have their own assets such as warehousing, vehicles and machinery. Instead they provide a service to clients by negotiating contracts with carriers, distribution centres and transportation companies to find the best possible supply chain solution for their clients. Because of this, they have the expertise and flexibility to find the right fit for your needs and it is their responsibility to ensure that everything runs smoothly. The disadvantage of this type of 3PL is that many companies may be involved in the process which could lead to more opportunities for errors.
3PL Management Software
When considering assets don’t overlook technology as a vital soft asset that 3PL’s use to streamline the management of entire supply chains. Ask yourself whether the provider is making use of the cutting-edge technology available, such as Warehouse Management or Transport Management software to track and trace all aspects of the operation.
The type of 3PL company you choose will depend largely on your particular needs and the kind of business partnership you want to build. Ultimately, outsourcing the logistics aspect of your business to a trusted 3PL partner can give you the resources you need to maximize profit margins without the burden of managing the process.
Was this article beneficial? Read about The 4 Crucial T’s Of Supply Chain Transparency.