When you run a business, you typically sell services and or products. This brings in money and the difference between your costs and pricing in your profit.
Beyond the numbers is a complicated mechanism called logistics, and this is the path that your items travel from a manufacturing facility to the end customer and everything in between. Your goal as a business is to have a successful transaction that delivers your products on time to satisfied customers and generates a profit from it.
While this sounds easy enough, several compact steps happen sequentially, and you must ensure they run smoothly. This can be a lot for a business owner to manage, so they often hire outside help to fulfill orders.
Are you looking for help with your logistics? These are some of the benefits of third-party logistics providers.
Table of Contents
Lowering Your Costs
Every penny that goes out of your business is one less cent in your pocket, so you must take advantage of any savings you can find. With a third party logistics provider, they can save you money in several ways.
Time
Time is money, and you only have a finite amount. Anything that takes you away from sales is money lost. Instead of putting your and your employee’s efforts toward logistics, why not get a professional to do it?
They have dedicated team members who only focus on logistics, and they do it extremely well. They manage their time efficiently and ensure your orders are processed and shipped fast.
Infrastructure
Running your logistics requires storage of product inventory and agreements with shipping companies to make your deliveries. There is also staffing and tracking technology to consider, which all costs you money to operate.
With a 3PL provider, they already have the facilities in place and can accommodate your business easily. They also have relationships with shipping companies, and because they work with high volume, they get much better rates than you could get.
Staff
As mentioned above, you need to have employees work in a warehouse, pick and pack orders and set up deliveries. Using a 3PL provider frees your staff to focus on other business areas like manufacturing, sales and marketing.
Improve Customer Satisfaction
Your goal in business is to attract customers and keep them loyal to your brand. This involves quality products but, more importantly, prompt service. When someone orders an item from your store, they want it delivered on time, and in this fast-paced world, that means same-day or next-day delivery.
3PL companies have the right infrastructure to handle your orders, big and small. They usually have a central hub in key cities where they network and establish shipping procedures to quickly transfer and deliver goods. All this means your items will be delivered promptly to keep your customers satisfied and excited to make more purchases down the road.
Handling Scale
As your business grows, so do your fulfillment needs, which means added demand for staff to perform at a higher volume. Scaling your business operations means more profits, and you want to gain market share locally and internationally.
Fortunately, 3PL companies have the infrastructure to handle it. Adding volume to your business activities doesn’t mean higher costs but rather the opposite. A third-party provider understands scaling, and with your higher volume comes price reductions as variability costs are reflected based on the rising and falling volumes processed. Even if you have temporary holiday peak times, they can handle it without your need to recruit and train seasonal staff.
When you expand to a new market, they likely already service the area and can quickly accommodate your logistical needs there. As you expand, your 3PL provider has the facilities and manpower to accommodate this growth.
Reverse Logistics
Along with the sales that you generate, there will be returns. This may be because of dissatisfaction with the products, damage, or other issues, and you need to be able to handle returns quickly and effectively.
3PL companies already have systems and are extremely efficient at dealing with returns. They offer:
- Credits and refunds for customers
- Processing of returns
- Restocking of inventory
- Refurbishing and repackaging
- Merchandise disposition
Regardless of the items you sell, 3PL providers can deal with this part of a business transaction and keep your customers satisfied at the same time because of their streamlined return functions and processes.
These are just some of the benefits of third-party logistical providers. Once you partner with them, you will find your business smoother as it allows less distraction from other key responsibilities you and your employees have in your operation. You can then deploy your staff to their core competencies without the burden of logistics.
