The popularity of third-party logistics providers (3PLs) is growing. Currently, 3PLs are a nearly $150 billion business in the U.S. and are utilized across market verticals; the big three Detroit automakers use more than 30 3PL providers alone. And business is growing; 72% of shippers are increasing use.
The growth isn’t a surprise to those in the industry. According to Armstrong & Associates, a leader in supply chain market research and consulting, the growth is driven by globalization, a need for supply chain information technology solutions and companies who are choosing to focus on their core competencies. We know that few other relationships have such a far-reaching impact. 3PLs offer the ability to design, execute and improve logistics networks through the development of processes, technology, and people.
So why should you consider outsourcing with a 3PL?
The benefits of outsourcing your supply chain management and logistics will vary based on the type of customized solution you choose, but you can expect to:
- Save time and money. Working with a 3PL enables lower risk and higher return by eliminating the need to invest in warehouse space, technology, and transportation. Not only can you meet requirements with fewer assets, 3PLs can take tasks like order management, billing and staffing off your hands so you can focus on more profitable core competencies. By integrating your strengths with those of a 3PL, you can boost efficiency and profitability.
- Streamline operations through vision and continued optimization. When choosing 3PL services, it’s vital to find one that has a strong vision and dedication to improving productivity, saving money and transforming processes. Through their continued supply chain consulting and optimization, you will be able to establish and measure Key Performance Indicators (KPIs), eliminate inefficiencies and streamline the supply chain. 3PLs driven by innovation can also help you develop reasonable short- and long-term objectives, and provide an effective change management and employee training program.
- Gain a powerful network of resources. Efficiency drives solvency for a 3PL, so they’re constantly developing relationships and processes that speed service and lower overhead. As a partner, you’re able to benefit from these resources which would otherwise be unavailable in-house or cost-prohibitive to develop.
- Enhance environmental stewardship. For a 3PL, environmentally-friendly initiatives are good for the planet and the bottom line. Optimizing distribution networks, consolidating routes, purchasing emissions-reducing technology and training drivers in fuel-efficient behaviors are just a few ways 3PL act as stewards of the environment. As a partner, you can promote their environmental stewardship as your own.
- Gain access to superior technology. The rate at which technology is evolving makes it a challenge to assess and implement the most effective options. Partnering with a 3PL gives you access to updated technologies as well as built-in system maintenance without the internal capital investment.
- Enjoy scalability and flexibility. Seasonal fluctuations are common for manufacturers, so the ability to scale warehousing space, labor and transportation can save money and enable stress-free transitions. And if you’re trying to expand into new markets, the flexibility of a 3PL makes growth seamless.
- Improve quality. Outsourcing to a 3PL means you have a partner rooted in efficiency, so you can expect to improve performance at multiple levels such as fewer customer complaints, improved order accuracy, lower inventory levels and greater availability rates.
- Enhance security. From new security regulations to best practices for improving security policies and procedures, 3PLs have the experience to manage all facets of supply chain security.
- Speed growth and change. By leveraging an outsider’s existing technology, infrastructure and people, you can grow quickly without the risk of costly capital investments.
- Leverage expertise. A significant role for any 3PL is to stay up-to-date on industry best practices and developments in logistics, manufacturing and supporting technology—including the latest supply chain and inventory control software. By leveraging a 3PLs’ expertise of regulations and local markets, you gain a partner that provides a competitive advantage while allowing you to focus on core competencies.