Key Benefits of Outsourcing to Third-Party Logistics (3PLs)

The most important part of the relationship with your customers begins when they click the buy button. Product delivery, order fulfillment, and product returns handling are messy and often expensive business functions that can make or break your customer relationship and profitability.

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When an e-commerce business is limited in expertise, time, and money to carry out logistics activities, it can outsource to experts like a third-party logistics company (3PL).?

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This article will explore the benefits of partnering with a 3PL to streamline your supply chain and logistics activities.

Let's get started.

3PL: What Is Third-Party Logistics?

According to the Council of Supply Chain Management Professionals, 3PL refers to “a firm that provides multiple logistics services for use by customers. Preferably, these services are integrated or bundled together by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.”

In short, a third-party logistics company (3PL) offers outsourced logistics and supply chain service solutions for companies.?

What Are The Benefits of Outsourcing to a Third-Party Logistics Provider?

Outsourcing logistics operations allows businesses to focus on critical core business functions while delegating the rest. Mission-critical functions like customer support let businesses build close ties with customers and establish trust.

Let`s look at some benefits of outsourcing to a 3PL.

1. Lowering? Costs?

Outsourcing relieves the need to hire internal logistics staff and set up expensive warehouses. High operational costs of hiring logistics personnel and setting up modern warehouses can be avoided by outsourcing to a third-party logistics company.?

1. Time to Focus on Critical Business Functions?

Handling logistics operations without technical expertise can be time-consuming. Outsourcing to third-party logistics frees more time to focus on core business functions like marketing.

1. Scalability

Third-party logistics are almost infinitely scalable. If your business doubles in 6 months, you do not have to look for assets to accommodate the increased demand. Your 3PL will be ready to expand to more shipping lanes as you grow to new locations.?

1. Efficiency

Third-party logistics have the IT system to carry out logistics operations fast while minimizing costs. One such area is in data collection and utilization. Third-party providers have the technology to capture and process thousands of transactions at a time while keeping costs low.?

1. Enhanced Supply Chain Visibility and Analytics

Real-time tracking and visibility are increasingly important to customers and businesses.

A 3PL equipped with advanced tracking systems, real-time data analytics, and robust reporting capabilities ensures businesses are better equipped to forecast demand.

1. Offer Multiple Shipping Options for Your Customers

Third-party logistics companies offer discounted shipping costs like free shipping, which drives more sales. A 3PL’s expansive carrier network provides varied shipping options to help e-commerce stores stay competitive. Outsourcing logistics activities helps businesses focus on growth while optimizing delivery.

Signs It’s Time To Outsource Your Logistics Operations?

Handing your logistics operations is crucial since you gain control over how to satisfy your customers until the goods reach the doorstep. However, influences such as fluctuating customer demand and logistics operations are better outsourced to third-party logistics companies.

Look out for the following signs.

• Lack of Time

Performing logistics activities in-house is time-consuming without third-party logistics expertise. Many companies compromise customer relationships they have taken so long to develop when they focus on simple tasks such as managing returns. When you spend more time in logistics operations than core y core business functions, it is time to outsource to a 3PL company.

• Limited Resources

When your business is limited in time and money to invest in logistics infrastructure, technology, and personnel, it can lead to capacity constraints and scalability issues when your business expands. A 3PL company has the expertise and resources to accommodate your growing business.?

• Demand Fluctuations

Although you should maintain adequate inventory levels to meet customer demand, a good 3PL company should offer a real-time inventory management system to cater to demand fluctuations.?

For instance, when items are not available for shipping, customers should have the option to make their orders and have them filled once the stock is available.?

• International Expansion

When your business expands internationally, navigating obstacles in international commerce can be difficult. Limitations such as the logistics expertise to carry out direct international orders and cultural barriers can make the process challenging. When you expand, a 3PL is better equipped with the expertise to handle your logistics activities internationally.

Outsourcing to a 3PL provider offers a global supply chain network and expertise in international trade to service your international markets without any hindrance.

Tips for Selecting the Right 3PL Service Provider

As an e-commerce business owner, choose your 3PL company wisely since it is your responsibility to satisfy your customers and be liable if anything goes wrong. Knowing what to look for when outsourcing your logistics partner is crucial.?

Here are some tips to look for when choosing the perfect third-party logistics for your business.

• Years of Experience: A third-party company with decades of experience in various markets can adapt quickly in case of any setback.
• IT Integrations: For seamless order fulfillment, your 3PLs IT system should have real-life data that you can integrate with your back-end e-commerce platform.?
• Supply Chain Flexibility: The 3PL company of your choice should accommodate fluctuating demand, handle new product launches, and expand to new international markets.
• Customer Response Center: The best third-party logistics companies offer responses to customer inquiries by phone or email.
• Customer References and Reputation: Research your 3PL company`s reputation online and look for feedback on their service performance.? A 3PL with positive customer reviews is likely to satisfy your customers.
• Compliance and Security: Ensure your third-party logistics provider follows compliance rules regarding customs regulations, industry standards, and security protocols. Request their certifications, licenses, and security measures to guarantee no supply chain interruption once you start doing business.

Bottomline

Even though companies risk providing poor customer experience when outsourcing their logistics operations, hiring out is beneficial. Companies gain time to focus on crucial business functions and save on high operational costs.??