Why Firms Should Consider Outsourcing Logistics Management Services
In a global business world with evolving demand in numerous markets, many firms are facing difficulties with logistics and supply chain management. These struggles caused by varying regional regulations, ever-changing tariff regulations, and local market barriers are leading to increased costs and operational strain for many businesses that are either manufacturing overseas or engaging in international commerce. Having to allocate valuable human and physical capital towards logistics management, firms are not able to focus on their business expertise, innovation, and meeting customer expectations. This is where the argument for outsourcing logistics management to a 3PL or Third-Party Logistics provider comes in. Below we take a deeper look at some of the key benefits of outsourcing your firms’ logistics needs.
1. Freedom to Focus on Critical Operations: Instead of trying to perform logistics services in-house, outsource it to a company that has in-depth expertise and experience in carrying out logistics operations with ease. This in turn will help you free up your valuable resources which can be used for other critical operations.
Time Saving – Outsourcing cannot only save you money in the long run, but it will also save you something of equal value – your time. Relieving yourself and your employees of the burden of daily logistical tasks allows for you to spend more time on growing your business.
Accountability – Putting an aspect of your company into someone else’s hands isn’t easy. A good 3PL service provider will take responsibility for your business and be held accountable to your standards.
Optimization – Having the necessary resources that you may not have access to on your own, helps insure that your logistical needs are met in the most effective manner.
2. Reduced Back-office Work: Strong 3PL providers have sufficient manpower and the desired systems already in place. They can process thousands of bills and audit them appropriately within short time. Outsourcing logistics back-office tasks to professional vendors therefore frees up your time and increases productivity
Expertise – Most 3PL providers are passionate about what they do. As a result, they will integrate their level of expertise with your business practices to ensure the best customer service experience possible.
3. Enhanced Customer Satisfaction: Most service providers specialize in logistics services only. They know the domain better than others and can come up with innovative ideas and strategies to further reduce costs for their clients, as well as deliver better experience. This leads to enhanced customer satisfaction and builds partnerships which can last a lifetime.
Innovation – Much like you are an expert in your scope of business, 3PL providers are an expert in theirs. A provider has the ability to work with you and apply their knowledge to enhance and improve your bottom line in an innovative way.
4. Reduced Liabilities: Third-party logistics service providers help to manage all inter-connected carrier contracts, safety ratings, and insurance certificates. More often than not, they have a back-office staff ready to work with invoicing variances, carrier vetting processes, etc. This means you stand to face zero liabilities as all the grunt work gets taken care of by the service provider
Reduce Risks – Outsourcing your company’s logistical needs not only reduces labor risks on your end but it also reduces your financial risk of an investment in property, equipment, and transportation in the even your company or business downsizes.
5. Efficient Handling of Petty Expenses: Small expenditures like insurance costs, docking costs, transportation, or fixed warehouse costs are all taken care of by the logistics service providers. You do not have to deal with petty expenses, thereby freeing up your accounting department's time.
6. Cost Efficiency: Don’t saddle your business with the cost and hassle of establishing your logistical needs when a 3PL services will provide you with warehouse space, technology, and transportation for you.
7. Economies of Scale: The large costs to scale up your existing team to perform logistics services in-house can easily be avoided by implementing a 3PL, which already has this infrastructure in place. The use of a third-party logistics service provider can help you achieve economies of scale as they specialize only in providing logistics services, thereby being able to ramp up or ramp down services within short intervals.
Adjustable – As a 3PL provider owns the warehouse space and transportation, they also have the ability to increase all your logistical needs as your business grows. Also if your company offers a seasonal product or sales are cyclical, a good 3PL provider will adjust your needs accordingly.
Network– 3PL providers have a vast network of resources and established relationships with providers that can offer the most cost-efficient service possible.
Better Rates– As 3PL providers are servicing multiple different clients, they can avail better rates than when an individual firm deals with logistics carriers. As a 3PL grows, the increased business they provide carriers helps decrease your individual shipment costs as well.
8. Efficient Real-time Tracking: Most 3PLs are technologically adept and allow for real-time tracking and visibility of loads. Some of the more popular service providers even provide integration with WMS and ERP. By being able to track your shipments with ease, you spend less time worrying and more time focusing on other core areas.
Technology – 3PL companies have the ability to make significant investments in their technology and software that would be unfathomable for a smaller business.
Outsourcing to a 3PL allows firms to focus on their business strengths, while optimizing supply chain management by working with logistics experts. At Supply Chain Solutions we believe, firms should focus on their strengths, and let us use our expertise for end-to-end logistics management. We are not just a regular 3PL, as we directly integrate our systems with your entire business’ operations and provide support with all your supply chain needs. This includes supplier analysis and oversees sourcing support, strategic tariff management assistance, process flow improvements, inventory management analysis, advanced supply chain management tools, and of course leading logistics management and brokerage. In this evolving global business environment, give SCS a chance to use our global network and industry expertise to enhance your logistics operations and service all your supply chain needs.
Interested in having a conversation about how Supply Chain Solutions could be an asset to your firm? Contact us today to speak with a team member.