3PL providers can provide companies with numerous benefits and savings
3PL providers are companies that offer comprehensive and even one-stop solutions for enterprise supply chains in packaging, warehousing, transportation and order fulfilment. 3PLs can identify and fill the gaps in your supply chain. Their expertise, best practices and technologies can integrate into your business processes to solve the most complex challenges in logistics and make your supply chain a more agile, responsive function — a necessity in today’s uncertain market environment.
As with any warehouse operation, the fundamental functions of a third-party logistics (3PL) operation are the receipt, storage, and shipment of goods. In 3PL public or private warehousing, however, there is an immediate divergence of mission. Conventional warehouses normally handle the flow of goods for a single client, while the 3PL providers may be responsible for the inventory of multiple clients. To further complicate the process, each client usually has their own set of handling preferences, receipt and delivery schedules, storage mandates, reporting and accountability needs, and so on.
Why do so many companies make the strategic decision to rely on outside partners for execution of transportation, warehousing, packaging services?
The benefits are vast. 3PLs can gain you access to better freight rates, improve efficiencies, cut costs, share knowledge and connections, provide technology, save time, and much more.
Key benefits of working with 3PL providers:
1 – Cost Savings
Perhaps the most common reason for outsourcing is that 3PLs can ensure customers get the best value from their carriers. 3PLs have more leverage with trucking companies than individual shippers do. Working with drivers on behalf of multiple customers, 3PLs can gain incentives or negotiate pricing based on volume and order frequency.
Additionally, a quality 3PL will continuously identify ways to improve efficiencies, cut costs, and add value to your operations. (It’s how they maintain your business.) It pays to have experts on your side to monitor, analyse, and optimise your operations month over month, year over year.
2 – Network Capacity
Vetting of carriers for equipment, insurance, and qualifications is a large undertaking. Before you hand your product over to a driver, you need to ensure they are the right person or company to represent your organisation. A 3PL works tirelessly to build their carrier network to include only qualified and reliable service providers.
Because of their qualified networks, 3PL providers can help you secure more capacity. A non-asset based 3PL will have a diversified carrier base. Often, they have relationships with tens of thousands of drivers. This means they have access to numerous options and solutions. You can save an extreme amount of time by calling a 3PL instead of calling on multiple carriers.
3 – Scalability
You can more easily manage high and low seasons with the assistance of a 3PL and they can help you quickly respond to increases in demand or expansion. 3PLs are connected to service providers nationwide and can more easily respond to flux, linking you to resources without any added risk or legwork. More can be accomplished, faster.
Gartner points out that it is “far easier and more effective for a company to scale its transportation requirements by using a third-party transportation company to manage the risk of full-time equivalents (FTEs), assets and maintenance.”
4 – Service Improvements
The right 3PL partner can help you IMPROVE on service. Quality transportation partners can help ensure orders are picked up and delivered on time and by qualified drivers, keeping your customers happy and helping you avoid costly retail vendor chargebacks and schedule disruptions. A truck driver is the first point of contact with your customers, and a quality 3PL can help ensure that is a good experience.
3PLs are able to keep closer tabs on transportation because it’s their priority. They aren’t pulled in multiple directions to manage product development or branding. With added attention given to driver communication and problem-solving, 3PLs can help brands avoid service issues and keep customers happy.
5 – Technology Access
A 3PL can take on the responsibility and costs associated with investing in technologies that improve your operations. Able to share with multiple customers, they can handle the investment upfront and sustain maintenance costs, passing all the benefits on to you. Beneficial technologies that 3PLs provide:
- Transportation Management Systems (TMS)
- Real-time Order Tracking
- Route and Consolidation Optimisation Tools
- Data Analysis and Reporting Tools
- Freight Audit and Payment Solutions
- WMS Solutions
6 – Operational and Industry Expertise
A 3PL often goes in and out of the same receiver locations for multiple clients, so they can share information about preferences and best practices. This includes guidelines about order configuration, pick-up and delivery windows, scheduling, equipment, etc. Understanding customer needs and communicating them to carriers can make a monumental difference in performance.
3PLs also have tremendous transportation expertise and industry relationships. Your account team can pass along important information tied to regulations, the freight market, and your specific industry. A 3PL partner should play the role of coach, teaching you transportation best practices that aid in improving your overall operations.
7 – Time to Focus on Core Competencies
Transportation can be a time suck if you don’t have the right systems in place. A 3PL partner can take many tasks off your plate, freeing you up to focus on other important parts of your business. Additionally, you won’t need to invest in logistics personnel to oversee day-to-day transportation, your 3PL partner can manage instead.
Daily tasks that can be taken off your plate:
- Identifying and booking the right service provider and mode (truck, rail, LTL, reefer, etc.)
- Appointment scheduling for pick-up and delivery
- Driver and facility communication
- Order tracking
- Issue management
- Billing and paperwork
- Performance reporting
8 – Issue Management and Reduced Risk
Things happen on the road that can delay an order, no matter how much prep and communication goes on with a driver. A 3PL partner can handle these concerns, either rebooking another truck, aiding a driver with their unplanned event, or communicating updates to receivers.
Issues of the road could include:
- Weather interruptions
- Schedule changes
- Health concerns
- Unplanned checkpoints
- House of Service (HOS) and ELD Compliance
This also includes freight claim management. If a shipment is lost, stolen, or damaged it’s the 3PLs responsibility to solve. A 3PL partner will help you file and push necessary information through the legal system quickly, removing responsibilities from the plate of the shipper, saving time and money.
Many companies think they can save money and handle supply chain needs on their own, but that oftentimes isn’t feasible. Companies would actually save more money and become more efficient with their supply chains by partnering with an experienced 3PL providers with an extensive network of resources and warehousing locations.
Working with 3PL providers is a partnership and must be treated as such rather than as a transactional relationship. It takes a great deal of time and effort to secure quality carrier relationships and manage shipments. Building a supply chain strategy that includes outsourcing of transportation can help companies save time and money while also improving operations.
Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.
Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The Clarus WMS platform will cost effectively scale with your business based on demand.
Clarus WMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfillment and manufacturing warehousing.