Logistics and shipping are crucial to any size of business. It makes sense to ensure that those tasks are fulfilled efficiently and cost-effectively. This might become overwhelming over time as your business grows and your responsibilities in other areas evolve. In that case, you can rely on 3rd party fulfillment companies. Also known as third-party logistics (3PL), these companies may be the key to ensuring a seamless process of getting your products shipped and delivered on time to your customers!
About 3PL
Knowing the pros and cons of 3PL companies can help you decide if their services are right for you. But before that, it’s important to know what their services truly mean.
When it comes to a business that sells products, logistics pertains to the movement of items through a supply chain. This may include retail inventory management, storage and warehousing, fulfillment and distribution, and pick and pack fulfillment. Third party logistics is when your business outsources those responsibilities to another company that can take care of shipping, storage, fulfillment, and other areas of supply chain management.
Why outsource?
3rd party fulfillment companies can enhance your business in many ways, especially if it is growing and you are already having difficulty in keeping up with in-house tasks. With their service, you can focus more on your business and on its core competencies. Down the line, they may be able to help your business increase its productivity and efficiency, maintain flexibility, expand logistics capabilities, access logistics expertise, and stay up-to-date with logistics practices. Here are more benefits you can expect from them:
Cost savings
Third party logistics may seem like an extra expense, but that can easily become cost-effective when you realize how it can boost your productivity and reduce your risk of making costly mistakes. A 3PL provider may also be able to help prevent surprise expenses that may occur during the movement of goods.
Enhanced efficiency
Reputable 3rd party fulfillment companies have extensive global networks with established routes and warehouses in key locations. This way, they may consolidate shipments and storage to increase efficiency and reduce costs.
Access to cutting-edge technologies
Reputable 3PL providers are always equipped with the latest technologies for inventory management, automation, shipment tracking, and other areas. They offer cutting-edge technology through EDI and WMS systems to ensure electronic connectivity, full visibility, supply chain analysis and reporting, process improvement, and ROI measurement. Also, they help eliminate some manual processes to speed up the delivery and fulfillment of orders.
Experience
Seasoned 3rd party fulfillment companies have a thorough understanding of the customs, laws, regulations, business culture, and language of China. Their extensive global network of logistics options also gives your company access to outsource solutions and freight services.
Disadvantages of 3rd party fulfillment
Working with the wrong 3rd party fulfillment companies will make you prone to experiencing some of the cons associated with them. Here’s what you need to know:
Lack or loss of control
3PL might make you lose control over your supply chain and its operations. That’s why it’s important to verify the capabilities and reliability of the service provider to make sure that they can consider your requirements.
Expensive
The upfront costs might make the service expensive. Therefore, it makes sense for your business to be more financially stable before you invest in 3rd party fulfillment.
Lack of transparency
Some companies are unable to be transparent with their clients. The reason maybe the language barrier or simply the provider choose not to. So, know as much as you can of the service provider before you make any decision.