You Need Logistics Services that Delight Your Customers, Not Just Pick, Pack and Ship
Trying to find the right third-party logistics (3PL) provider can be difficult.
3PLs are more than just pick, pack and ship. Although they certainly should be capable of that – along with 99% inventory accuracy levels.
Many 3PLs provide great service, but they all serve different markets, different needs and have different strengths. If you are not careful, they will try to fit your needs into their box of solutions.
Do not let them succeed. They do not know your unique requirements. But you do.
Furthermore, you know your challenges in reducing logistics costs while improving customer satisfaction. You know the uncertainty your organization faces in supply and demand. You know the optionality required to increase adaptability and resilience.
Selecting 3PLs that fit your unique requirements is a key to unlocking the five reasons companies use 3PLs:
- Cost reduction
- Focus on core competencies
- Scalability
- Extend your expertise
- Delight your customers
Cost Reduction
Third-party logistics providers (3PLs) play a crucial role in reducing costs for any organization that ships goods.
They achieve this through a variety of strategies, primarily by providing economies of scale.
The economic concept of economies of scale dates back to Adam Smith. The 18th century author of The Wealth of Nations. Smith expounded upon how the division of labor and specialization increase returns on production. This increase reduces costs because the average price of producing something declines as volume increases.
Economies of scale applies to services like packing and shipping and the fulfillment process.
3PLs have extensive networks and infrastructure already in place. This infrastructure allows 3PLs to distribute goods more efficiently and at lower costs than if you tried to build these networks on your own. Leveraging this existing infrastructure often results in reduced shipping rates, faster delivery times and more reliable service.
3PLs can consolidate shipments from multiple clients, further reducing costs. This consolidation uses transportation resources more efficiently. This efficiency lowers fuel costs and reduces carbon dioxide emissions.
Retailers, brands, manufacturers and more can benefit.
Focus on Core Competencies
You focus on what you do best and let 3PLs focus on what they do best: your logistics.
Maybe you make widgets. Sell blouses. Build mouse traps. Manufacture medical devices.
You can concentrate on better mousetraps and better medical devices. These core activities can increase productivity and reduce your operational costs.
Meanwhile, your 3PLs handle the complex world of global commerce.
Managing logistics can be a significant challenge. It involves a wide range of tasks that vary by sector, need and region. Outsourcing warehousing, transportation, customs clearance and other logistics tasks to 3PLs reserves your resources for creating and marketing your products.
3PLs have the experts and infrastructure to handle logistics efficiently and effectively. They can navigate the complexities of international shipping regulations, manage warehousing and distribution, and deliver on time, in full.
3PL expertise reduces the risk of costly errors or delays.
Outsourcing logistics also reduces your capital investment in infrastructure and technology. You don’t pay to maintain warehouses. You don’t buy vehicles. And you don’t hire logistics personnel or lease logistics software.
You can plow those cost savings into your core business areas.
Scalability
3PLs allow you to scale up or down to meet fluctuations in your demand. Crucially, this also involves new territories, regions and even countries.
This optionality is key to scalability in operations. In the dynamic world of commerce, demand can fluctuate rapidly. During peak seasons or product launches, you might need to scale up logistics operations quickly.
3PLs have extensive resources and capabilities to accommodate these surges. Again, this ensures timely and efficient product delivery.
And when demand declines, you’re not stuck with an expensive, large-scale logistics operation. 3PLs provide the flexibility to scale down operations, thereby helping businesses avoid unnecessary expenses.
Moreover, 3PLs can help you expand into new geographical areas.
Entering a new market involves navigating unfamiliar regulations, building new supply chains and establishing distribution networks. 3PLs can leverage their global presence and local expertise to manage these complexities. Market expansion becomes smoother and more cost-effective.
During an expansion, even organizations with in-house logistics networks can benefit from 3PLs.
Say you’re a midsized retailer with regional distribution. You want to expand from the Southeast to the Northeast United States. Choosing the right 3PL means the infrastructure and resources are in place for immediate expansion. No costly buildout necessary.
3PLs can help you embrace optionality. You can adjust quickly to rising or falling demand and discover new markets.
Extending your expertise
Perhaps your organization has years of experience in your field. Or you’re a startup.
Either way, 3PLs help extend your expertise into the field of logistics.
3PLs have years of experience in the logistics field. They have refined their operations, developed best practices and built robust logistics networks. They offer a wealth of expertise to your brand or your manufacturing base.
This experience allows them to handle complex logistics tasks efficiently and effectively. Want to build that from scratch? Get ready to fail, waste resources and miss out on the latest trends and technologies.
Your order fulfillment processes will be subpar. Who knows how confusing your warehouse space will be? Will you even be able to figure out your inventory levels? Will you be able to select the best warehouse automation tech – often powered by artificial intelligence and machine learning?
Your 3PL is responsible for the accuracy and disposition of every inbound receipt and outbound shipment. Your 3PL must maintain inventory accuracy levels greater than 99%.
Furthermore, your 3PL should offer expertise you cannot match.
Delighting your customers
Add up those four reasons why you should consider using 3PLs, and you have the fifth and final reason – you have delighted your customers.
- They are delighted by reduced costs, which adds to your competitive advantage.
- They are delighted by better products and services because you focus on your core competencies.
- They are delighted that you can scale up to meet demand, even entering new regions. (Sure, customers don’t notice when you scale down. But they benefit from the unseen savings you reap by not building out an extensive and expensive logistics network.)
- And they are delighted by your 3PL’s logistics expertise. (Yes, that expertise operates behind the scenes. Customers don’t see it. But you will hear the complaints if delivery fails.)
Beyond that, A robust 3PL network allows you to place inventory closer to your customers. This makes delivery quicker, cheaper and on time.
Quick delivery is a must in today’s world. Retail locations that suffer stockouts cost sales. In eCommerce, delivery is the gold standard. If you doubt that, look at Amazon’s meteoric rise over the last two decades.
The Bridge to the Right 3PL
Ready to look toward the future with a robust 3PL network?
Tompkins Ventures is your bridge to selecting the best 3PL to meet your needs. Our global network can fit any sector and any requirement. And our team’s decades of experience help us know which 3PLs work best in which situations.
I would love to chat about your future 3PL needs. Or about how a 4PL model can deliver even more success. Reach out, and let’s talk.
Jim Tompkins, Chairman of Tompkins Ventures, is an international authority on designing and implementing end-to-end supply chains. Over five decades, he has designed countless industrial facilities and supply chain solutions, enhancing the growth of numerous companies. He previously built Tompkins International from a backyard startup into an international consulting and implementation firm. Jim earned his B.S., M.S. and Ph.D. in Industrial Engineering from Purdue University.