Benefits Of Supply Chain Third Party Logistic Services
Posted on: 24 May 2021
Supply chain management is an essential customer-facing business function. The function involves intricate business processes like warehousing, transportation, and distribution. Managing these processes can be challenging, especially for small and middle-sized businesses without logistical infrastructure. Luckily, firms can outsource such services to third-party logistic companies (3PL). Typically 3PL firms provide services in operational logistics, from warehousing to delivery. Below are the main benefits of supply chain 3PL solutions.
Reduced Operational Costs
Outsourcing operational logistics to a 3PL service provider helps to reduce costs. Supply chain logistics can be very costly given the considerable capital investment requirement and variable operating costs. However, third-party logistic companies have more bargaining power with freight companies. The firms can use volume and frequency to bargain for better service rates. Thus, 3PL companies charge their clients lower rates, which saves money. More so, a company can redirect logistical investment funds to grow other business facets.
Flexibility for Seasonal Demand
Most businesses experience seasonal demands for their products. In this case, demand may increase or decrease in specific days or months. For example, customers may order more products during holidays. Ordinarily, the need for supply chain logistics increases during such peak seasons. Thus, hiring the services third-party logistic service helps the company overcome the cost of maintaining idle logistical infrastructure such as trucks. The business can access 3PL services at any time, irrespective of their truckload.
Risk Management
There are many risks involved with supply chain logistics. For instance, a company may lose products through a warehouse fire. More so, goods may get damaged or lost due to transportation accidents. When a company uses third-party logistic solutions, it shifts these risks to the 3PL. In this way, the 3PL meets the cost of damages through insurance in an unforeseen eventuality.
Time to Build Capacity
Outsourcing supply chain management to a 3PL firm allows a company to buy time to build its capacity. When you start a new business, you may not have the logistical and financial capability to handle supply chain operational logistics. Such services require huge capital investment in the form of support infrastructure, systems, and labor. Thus, it is rational to outsource these functions to a third-party logistic service with existing capacity. In this way, a firm gets a short-term solution as it invests in the necessary logistics.
Take full advantage of supply chain third-party logistic service providers as you develop operational capability. The 3PL firms can handle all your supply chain logistics professionally and efficiently.
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