Third party logistics (3PL) providers are specialized firms that offer outsourced warehousing, inventory management, transport, and other supply chain management services to customers. In short, logistic services include a wide spectrum of functions that involve supply chain management, or more specifically, the management of the way products are distributed from the manufacturer to the end users.
3PL companies are a powerful resource for many businesses because they have the systems and capabilities in place to help retailers and manufacturers manage their supply chain with greater efficacy. Top-rated 3PL providers specialize in a wide range of solutions, such as transportation, cross-docking, packaging, inventory management, warehousing, and freight forwarding services. Some 3PL solutions also include value-added services related to procurement or production of goods.
7 Advantages Leveraging Professional 3PL Solutions
Time and Cost Saving
Third party logistic services providers specializes in logistics enabling them to acquire better knowledge and greater expertise than any selling or producing company. This knowledge together with the vast global networks of the large company size allows them to offer services at a low cost.
Ability to Meet Urgent Technical Requirements
The IT systems and equipment of 3PL providers are always updated and adapted to requirements of their customers, and this enables them to meet the needs of their client supplies. Producing or selling companies have limited time, expertise and resources to adapt their systems and equipment as quickly as required.
Low Capital Commitment
The fact that almost every operative role is outsourced to 3PL provider, the producing company is left with no need to own transport facilities or a warehouse. The amount of capital required by the client’s business is thus lowered. This is more particularly beneficial, especially if a company has high variations in utilization of warehouse capacity. This is because at equal fixed cost for the warehouse, reduced capacity utilization reduces the firm’s profitability.
Greater Core Focus
The outsourcing of supply chain services enables a company to focus more on their core business. If logistics is not a core business of the firm but is only a needed attachment, it should be outsourced to a supply chain management provider to reduce business complexity. Whether you’re searching for a logistics warehouse in California or a complete 3PL provider in Orlando, recruiting such help and resources will enable you to focus on your business’ core.
Increasing business complexity makes it hard for a firm to develop expertise in all the sectors, thus possibly lowering the core competency of the enterprise. If the business lacks expertise in an area, there is always a need to improve especially on the core competency that adds value to its products. It is therefore, important to be the best in a certain area of production of the core product so as to generate profits. This is because the consumers buy the core product because of its high quality.
Third party supply chain solutions can offer a larger variety of services than the client’s business could provide for itself. They can offer high flexibility in geographical aspects too. The client business becomes flexible in workforce size and resources, after the fixed costs of the logistics are turned into variable costs.
Speed to Market
If a business has a new product to manufacture but has limited facilities to produce them in, outsourcing might be the only way to enable the company take the manufactured product to the market within the shortest time possible. The business therefore, gains a stronghold in the market without high investments in training, machinery, human resources and new buildings. The company acquires the stranglehold on a new market before competitors takes a similar product to the market.
It’s worthwhile choosing supply chain management providers as they offer high quality services that lowers the operating cost of your business resulting to increased profits.