Third-party logistics (3PL) providers are companies that provide the resources, capacity, and solutions to help various businesses better manage and execute the logistics of warehousing, order fulfillment and shipping transport.
Value of Third-Party Logistics Providers
3PL companies that handle transport logistics and freight forwarding make it easier for businesses to concentrate on their primary objectives without having to worry about the transportation and distribution of inventory. In essence, 3PL companies monitor and manage warehousing operations, the transportation of goods, and order fulfillment.
In addition to helping businesses manage complex freight requirements, advanced third-party logistics providers go one step further by factoring-in cyclical market trends, road transport laws and limitations, as well as clients' unique needs and demands. Advanced 3PLs provide a fluid means to adapt and achieve the supply chain goals for particular businesses so as to maximize profit margins.
Advanced 3PL Providers Have Proficiency, Resources, & Experience
One of the most significant elements that distinguish dependable 3PL providers is to be strictly aware of service requirements for the delivery of products. Reputable 3PL companies have the proficiency and experience in the storage and routing of goods. They also employ skilled logistics management professionals, engineers, IT specialists, and supply chain managers to support day-to-day operations.
As a result, advanced 3PLs combine strategic thinking with hi-tech software and logistics resources to attain the most efficient and value-added supply chain possible for their clients. Below are a few ways in which 3PL companies can help businesses manage complex freight requirements, all while optimizing the management of their supply chains.
1. Freight Carriers Contest for 3PL Business
Freight carriers often rival with one another in serving third party logistics clients. Since 3PL companies contract with several carriers, they can often provide various service levels and shipment times. As a result, clients of 3PLs can benefit from more timely shipments, and often times at a lower cost.
In addition, since freight carriers contend with each other for the business of third party logistics providers, 3PL companies have higher bargaining power and control than a single shipper. This implies that you as the client have access to more reasonable rates, better time allocations and booking options, reduced demurrage, and per-diem penalty rates.
2. Hiring a 3PL Company is Often More Affordable than In-House Supply Chain Management
If your business currently does all of your shipping and logistics internally, you can encounter dramatic managerial savings by contracting a third-party logistics provider. Since 3PL companies cater to your whole supply chain from beginning to the end, they can save your business valuable time and resources.
Because of their size and trading power, they can broker freight for far less than you could likely attain independently. This saves your operations both time and revenue, and lets your workforce concentrate on your company's greater business goals and strategies.
3. 3PL Companies Offer Improved Control and Better Information
3PL companies apply state-of-the-art software for tracking and routing all the warehousing and logistics operations under their control. Many 3PLs employ skilled engineers and math wizards to manage accounts personally. By synchronizing all processes of the supply chain and transport modes, they’re capable of combining and reporting distinct data via value-added information services.
Lastly, 3PL companies offer better control via vendor relationship management and pro-actively communicating with foreign suppliers to ensure everything goes as planned. They even provide performance reports so you can accurately see where and how much you are saving. When using a third party logistics, shippers eventually have somebody to hold liable for all shipments along the legs of the supply chain.