Outsourcing to a 3PL Provider: 6 Benefits for Small Businesses

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In the new world of omnichannel commerce, logistics and fulfillment are often major cost centers for businesses of all types. The ascension of eCommerce has created a market where both B2B and B2C businesses are expected to ship ever more quickly and at ever lower costs to their buyers. The result? Global spending on logistics could reach a staggering $10.6 trillion by 2025, according to one report.

That high demand makes logistics a considerable hurdle for many small and medium-sized businesses. In-house logistics can be brutally expensive and often requires significant capital investment. Instead, many businesses are choosing to outsource their logistics to a third-party logistics provider or 3PL.

3PLs come in all shapes and sizes. Some, like DHL and FedEx, are household names, but thousands of other local and regional 3PLs operate all over the US. Some own their own vehicle fleets, while others are brokers that coordinate the movement of your goods between various carriers. What they have in common is that they specialize in providing logistics solutions for your business. What benefits do these logistics providers offer that makes them such a popular option? Consider these six top advantages.

1. You can save a lot of money and reduce the capital investment required

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For many businesses, doing your own logistics simply doesn’t make financial sense. In-house logistics comes with steep costs, including but not limited to:

  • Buying, maintaining and insuring a vehicle fleet
  • Warehouse rental or purchase
  • Utility bills for warehouse facilities and fuel for vehicles
  • Hiring and getting drivers in an industry with a shortage of them
  • Labor that likely includes overtime
  • Software and other technology for coordinating routes and schedules
  • Taxes and fees

The potential cost savings from outsourcing your logistics to 3PLs are often large enough that huge businesses like Target and Justin Boots have moved away from in-house logistics and begun working with third parties. It’s not hard to see why: Working with a 3PL doesn’t just reduce costs, but often increases value and ROI on logistics services.

2. 3PL can give you the reach you need (and might not have yet)

Many 3PL providers have the kind of national (or international) network that can allow your business to expand into new markets. This is one of the biggest advantages of using large logistics providers like UPS. These titans of the logistics industry can provide fulfillment and supply chain services that others can only dream of, and their enormous scale facilitates speed and efficiency.

3. 3PLs are experienced in dealing with tricky laws and regulations

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A major part of streamlining your fulfillment process is learning to navigate the complex web of transport and safety regulations that come with shipping freight. A qualified 3PL provider will have inside knowledge of all of the documentation and certification that comes with shipping your particular cargo type.

For hazardous materials shipping, this detailed knowledge is especially useful. A trustworthy 3PL provider with hazmat experience will know the rules inside and out (and will probably have their own safety standards as well). Knowing exactly which UN hazmat warning labels are required and whether you’re using the right type of hazmat shipping boxes can make all the difference in ensuring that your goods sail smoothly through checkpoints, click here to learn more.

4. Your employees will have more time and resources to focus on core competencies

If your business doesn’t have the resources to staff a full-time logistics department, it’s often best to leave it to other professionals. Asking employees from other departments to wear the “logistics hat” often results in suboptimal performance, as these employees may have less time to devote to the core responsibilities of their job. It can also take a huge toll on employee morale if employees are routinely required to fill roles that aren’t in their job descriptions. Partnering with a 3PL takes the heaviest logistical burden off your employees and puts it on a structure designed to bear its weight.

5. You’ll get access to a wide range of new resources and technologies

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Many logistics providers have made considerable investments in the latest technology. From fuel-efficient vehicles to advanced warehouse management software, 3PLs have the time and resources to focus solely on their logistics capacity. By partnering with them, you can gain the advantages offered by these improvements, including more efficient routing and storage.

It’s worth noting, of course, that this isn’t necessarily true of every logistics provider. As with any investment, it’s critical to thoroughly research a potential 3PL partner and not settle for one that isn’t a great fit for your organization.

6. It takes much of the hassle out of up or down-scaling

Scaling logistics capacity quickly and flexibly can be a challenge for businesses of any size. Unexpectedly slow or busy periods can result in shortages that strain fulfillment capacity or idle fleets that waste it. Improving the flexibility of your supply chain’s scale is another significant point in favor of using 3PLs.

Source: ddslogistics.com

A good 3PL’s services should be easy to scale up or down as needed. Some experts recommend 30 times your business’s normal orders as a benchmark for the up-scaling capacity that a 3PL should provide, so make sure to ask a potential logistics partner about their capacity to handle surges or slow periods. Logistical capacity is too precious to waste, but when you need more, it’s often a matter of extreme urgency. Reliable 3PLs can provide the best of both worlds.

If your business is currently struggling with logistics challenges, know that you’re not alone. However, as more and more businesses entrust their shipping and logistics to 3PLs, it becomes easier every day to give your customers the fast and easy fulfillment that they demand. When you’re weighing the risks and the benefits as you would with any other business decision, remember: an investment in your logistical capacity now can pay huge future dividends, even if it’s with an outside organization. Finding a great 3PL that makes logistics easy is often the first step to building a robust logistical capacity of your own.