Why Outsource to a Third Party Logistics Company?

Have you ever stopped and really thought about how businesses end up on the Fortune 500 Company list? While there are certainly many other steps or requirements involved in such an endeavor, there is one thing that the majority of them share. 

Most of the companies who make the Fortune 500 list do so by leveraging the power of outsourcing. And those companies that ship products, generally outsource to a third party logistics company to fulfill some, if not all, of the logistics tasks.

There are multiple reasons why some of the most successful and recognizable brands partner with 3PL companies. Today, we are going to give you 5 of the best reasons you should probably consider following suit! 

So, let's cut this intro in half and get to the good stuff!

Understanding the Role of a 3PL 

One of the most misleading things we often hear about 3PL companies is that they are all essentially the same.

On a very core level, yes, that is true. However, there are several different types of 3PLs out there.

Some of them own their own equipment, while others subcontract from other partners in their network. There are some 3PLs who focus on retail operations, and some who are experts with warehousing or distribution centers. There are local 3PLs, as well as those who specialize in international freight movements. LTL, FTL, freight forwarding services and multimodal are some other types that come to mind. 

3PL is simply an umbrella term that refers to a company that specializes in helping a business fulfill specific shipping needs.

Let's take a closer look at a few of the more popular benefits of partnering with a 3PL...

Allows You to Focus on Business Growth

Depending on the industry, logistics takes up a large portion of most daily operations.

Imagine not having to worry about the movement of freight or products in and out of your facilities. Imagine having the flexibility to focus on driving sales, knowing that your 3PL is fully capable and accountable when it comes to keeping up with consumer demand. 

With a 3PL by your side who has their finger on the pulse of the market and a well-connected network backing them, you can take your business to the next level.

Reduce Capital Expenses for Integrating Technology

Technology is needed in order to maintain operational efficiency in the supply chain.

Keeping up with updates, and technology in general, costs retailers, manufacturers, and distributors millions of dollars per year to maintain.

But what if you didn't have to worry about investing in this technology, or training employees on how to use it, or having to subcontract it professionals to maintain these platforms?

If you partnered with a reputable third party logistics company, none of this would ever be a worry. Managing your digital network is something that all 3PLs have the ability to offer to varying degrees.

Furthermore, due to their in-depth and extensive exposure to the latest and greatest in logistics technology, they often times can offer bleeding-edge technological solutions to just about any task.

Save on Overhead Expenses

It is estimated that the average distribution warehouse is over 200,000 square feet. That's a lot of space to fill with merchandise, keep cool in the summertime, and heat in the winter. It's also a cash cow for payroll, paying hundreds of employees their salary, benefits, and insurance.

Now, we are not saying that entire businesses should just fire their employees and go fully outsourced or automated. But reducing some of the expenses associated with the fulfillment of tasks that could be handled a better way is never a bad thing!

Imagine reducing your overhead expenses by simply paying a 3PL a monthly fee. And better yet, what if that monthly fee equated to only a fraction of your usual monthly overhead expenses. We see some of you already jumping aboard the 3PL train now!

Improve Customer Service

Today's consumer demands quick, efficient, and timely delivery of the products they purchase from you. They expect to be notified via email, text message, or at the very least, an automated phone call if their shipment is going to be delayed. 

The best 3PLs use advanced, cloud-based technology solutions armed with automated alerts that notify customers of any changes on their delivery status - even while it's in route. 

Whether you are in need of TMS, CMS, or Inventory Management software, a third party logistics company can provide these tools. This is a huge plus for smaller shipping companies. Many of whom either cannot afford to invest in these platforms or do not have the time to properly maintain them.

Final Thoughts

When it comes to the benefits that a third party logistics company provides, they are literally endless. As time passes, new methods, technologies, and new industries are built, the demand for 3PLs will only grow.

If the five reasons listed above seem appealing to you, your next logical step is simply finding the right 3PL. 

And hey, since you are already here on our blog, why not drop a line to the experts here at Redwood Logistics?