Top 4 Ways a Third-Party Logistics Company Saves Shippers Money
Each day, thousands of shippers depend on support from experienced third party logistics companies to help them manage their supply chain operations. From simple freight bill auditing to complete supply chain solutions, 3PL’s are increasingly providing value to shippers from manufacturing companies to retailers of brick-and-mortar and e-Commerce platforms. While most shippers understand the value of 3PL companies – they may not be too familiar with their cost savings capability.
If you are a shipper and you’ve wondered how a third party logistics company can save your company money, here are 4 unique ways they can reduce your expenses – improve profitability, and increase bottom line profit.
Cost Savings #1 – Reduced Freight Cost
There is a saying in business that volume cures all. We all understand the role that volume sales have on pricing. Whether it’s shopping at Costco or setting up multiple shipments from the same carrier, volume in the supply chain definitely can save a company money. Although your company might ship hundreds of packages each day, imagine the cost-savings associated with thousands of individual shipments on a daily basis. This is the buying power of an experienced and professional 3PL.
Third-party logistics companies work with hundreds of companies just like yours – each of them with parcel, LTL, FTL, and international shipping requirements. The 3PL company of today establishes strong relationships with carriers ranging from parcel to LTL. They are provided with exceptional rates by these carriers and pass the savings along to their clients. When you are paying less per shipment – your company will save money with each movement of freight.
Cost Savings #2 – Reduced Payroll
When most shippers review their monthly P & L statements, especially their logistics and shipping departments, a major monthly expense is payroll. From paying shipping and receiving employees, to those in accounts payable and shipping customer service, the average shipper spends a tremendous amount of money on paying people to operate their logistics programs. However, when you turn to a third party logistics professional to manage and operate your supply chain operations, the cost is a fraction of the amount of payroll.
Plus, when a 3PL manages your logistics duties, it permits you to allocate your employees to other pressing areas – such as improving customer service, introducing new sales opportunities or other focus areas.
Cost Savings #3 – Better Controls on Freight Invoice Auditing
Most shippers understand the reality that mistakes on a freight invoice can cost their money a tremendous amount of money. This is a major reason why large volume shippers trust a 3PL to manage their freight bill audit and pay solutions. It is estimated that the average company spends $11.00 on payroll alone to audit a single freight invoice. An experienced 3PL can accomplish this task – and at better efficiency for a fraction of this cost. And unfortunately, many hidden errors are missed – simply because the employee completing the audit isn’t familiar with the in’s and out’s of the logistics industry accounting world.
A 3PL on the other hand are experts in freight auditing. They find errors that most seasoned accounting specialists miss simply due to the fact that they don’t know what and where to look. Not only do they know how to audit, but they utilize advanced software solutions that helps to complete the auditing much more efficiently.
Cost Savings #4 – Improved Efficiency of Supply Chain Communication
A leading cost that most shippers hate paying are missed deliveries or delivery reattempts. While this cost is often linked to using inefficient carriers, another leading source of excessive delivery charges are lapses in communication. 3PL’s utilize advanced cloud-based TMS and CRM systems that can provide real-time updates to potential delivery recipients on the status of their shipments. This permits the carrier to send updates on traffic, weather, or other service disruptions that will impact the expected delivery of products – from parcels, overnight packages, LTL or FTL shipments.
Not only does this improve delivery efficiency and reduce additional service charges, but it also helps to improve customer service. When your customers or recipients of your products are pleased that you went the extra effort to communicate with them, they are more likely to continue working with you – which equates in improved customer retention and increased future business.
Partnering with the right 3PL can free up your time and resources to focus on other important aspects of your business such as sales, marketing, and product development. It not only helps you to save money, but also helps improve your complete supply chain operations.