Why favour Third Party Logistics, know the reasons

Business

Manufacturing companies expand and keep growing. They develop products to fulfil both domestic and global customers. Now reaching global customers has become more of a logistical challenge than ever before. Logistics has its individual discipline reflecting changing subject with respect to transport regulations, depending on the fluctuations in demand. Squeezing most profit is not easy always, especially if logistics is not your business primary focus.

Making a great product alone is not enough; the product has to reach the market and the customers hands. Now, what does a growing manufacturer do get their logistics straight? This is the place the 3rd party logistics gets an entry. They are also referred as 3PL firm.

Third Party Logistics -3PL

The name specifies that under this model there are three parties involved for a product to reach a customer. The three parties are the manufacture, the 3PL firm or the shipper and the customer.  The third party logistics firm services may vary extensively and include logistics functions such as:

  • Procurement of transportation
  • Contracting dedicated transportation
  • Management of inventory
  • Consulting and logistics management
  • Consulting and freight audit
  • Tracing and tracking shipment

Precisely, third party logistics firms manage shipping goods from distributors and manufacturers to their customers, regardless of the place. They operate their own fleets, or of their customers, thereby reducing the liability of the manufacturers’ and the cost relating to taxes, payroll and comp insurance of workers. A 3PL carrier mostly covers the cargo insurance cost.

3PL Advantages

Third party logistics offer savings to manufacturers who consider 3PL route. It is observed that the transportation costs through 3PL are less at least by 5 percent and this helps manufacturers running their individual shipping departments.

Apart from the cost savings, these firms are expertise in providing key benefits. The logistics world keeps changing constantly and is also subjected to regulations of federal transportation and foreign government’s regulations for international shipping.

The 3PL firms make it convenient for manufacturers to enter foreign markets as they handle the regulations. Getting shipments from one place to another is also assisted by them, and they also resolve logistical issues involved with product line internationalizing. This includes right from translating packaging to shipping handling requirements, without actually making huge investments.  In fact, the customs issues such as unpredictable delivery times, brokerage fees, lack of tracking ability or lost shipments are challenging with international shipping, but these 3PL firms handle it adeptly.

Third party logistics firms ship goods around the country and the world. They are able to do so as they have warehouse capacity in domestic and foreign markets. The up-front costs cannot be matched and it is not easy to penetrate to lease or buy warehouse space. This reveals the fact that a 3PL provider is much cheaper in fulfilling the services, reaching multiple markets, reaching products into the hands of the customers and in saving your cost even on smaller shipments.

How to Decide

There are fine reasons to choose a 3PL provider. Yet, the right decision is based on your business needs. Outsourcing logistics through third party logistics provider allows companies to concentrate on core competencies and ensures peace of mind.

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