The Third-Party Logistics

Successfully running a supply chain business is a costly operation and many companies make the mistake of heavily investing in internal resources, putting an enormous strain on the business. In actual fact, many of those tasks could be easily and more affordably outsourced to expert third party logistics (3PL) providers.

What is 3PL?

Third party logistics is where a company outsources one or several logistics tasks to a 3PL service provider in order to fulfill supply chain management functions. These 3PL services include customs, inbound freight, distribution and transport management, warehousing and order fulfilment.

Why Outsource?

Depending on your company’s needs, outsourcing tasks to a 3PL can cut overheads and give you the means to expand your business:

1. More Efficient Technology
   Rather than spending money on upgrading your own equipment and software, consider using a 3PL who already has all the latest technology and expertise in place. This in turn will result in greater efficiency and better management of operations for on-time delivery.
2. Test Out New Markets
   If your company is looking to expand into new cities or other countries, a local 3PL can be used to provide all the supply chain operations you need. This method will save on the costs involved in opening your own distribution centre in another region.
3. Seasonal Support
   If your business is very seasonal using the services of a 3PL provides you with the labour, warehousing, transportation and support you need during your busy months, allowing you to easily scale back when it is quiet.
4. Cut Transportation Costs
   Because 3PL’s have large fleets at their disposal they are able to offer lower transportation rates. They are also able to take advantage of the consolidation of loads and backhaul opportunities due to the sheer volume of freight.
5. Lower Risk
   Major capital is required to create a network with multiple distribution centres. This outlay, together with the high risks involved, can be avoided through the use of 3PL service providers         meaning expansion can be done quickly and efficiently.
6. Greater Customer Satisfaction
   Using an effective 3PL results in faster, more efficient service making for happy, returning customers who are likely to recommend your services.
7. Access to More Resources
   By using a 3PL service provider your company has access to a large number of resources you would possibly not have been able to afford. These resources include staff, transportation, equipment, the latest technology and warehousing space. This brings in efficiencies at every link in the supply chain without the major cost. Third Party Logistics providers keep up to date with latest trends within the logistics industries and make use of the most advanced tracking and reporting software.Major capital is required to create a network with multiple distribution centres. This outlay, together with the high risks involved, can be avoided through the use of 3PL service providers meaning expansion can be done quickly and efficiently.

Outsourcing your logistics operations to a respected 3PL gives you the time you need to focus on the other important aspects of your business. View how Dovetail’s Third Party Logistics Software can change your business.