Third Party Logistics: Everything You Need to Know to Outsource

third party logistics

The net revenues for 3PLs in the United States are about $77.1 billion annually. What does this industry do and how can your business benefit?

Third party logistics is a concept that can help you reduce your transportation and supply chain costs. If you aren’t sure how 3PLs work we are here to help.

Keep reading to learn how outsourcing your logistics to a 3PL can take your small to medium business and help it grow into a large business.

What Is Third Party Logistics?

A 3PL is a business that offers support services for your logistics needs. This could range from helping with one specific aspect or handling the entire process.

Most companies that utilize the services of a 3PL also have them integrated into the company’s transportation and warehousing procedures.

Major Functions of a 3PL

There are a few significant functions of a 3PL. Let’s go over what you can expect them to do for you.

Transportation

How are you managing your transportation needs? A 3PL has ongoing relationships with multiple carriers.

As a business, you can leverage these relationships to save on your transportation costs. They can also help you consolidate your loads or LTL freight.

A 3PL can also provide you more extensive transportation services such as payments and insurance documents.

As your relationship with the 3PL develops, you can work together to form a more complex and efficient supply chain.

Global Shipping

If you ship globally, then you are painfully aware of how complicated and time consuming the process can be. An international 3PL will take over this entire process. Everything from customs to freight forwarding is now taken care of.

When the 3PL is a representative of your business, it will work to ensure you comply with all trade regulations and customs requirements.

Information Technology

A 3PL will you the latest technology to manage your logistics. Their system can integrate your shipping, warehousing, and payment processing.

Ask potential 3PLs what technology they use. Some of the technologies you will hear are API, EDI, and cloud-based systems.

The goal of using this technology is to integrate and increase the visibility to the supply chain process and the status of shipments that are in transit.

Benefits of a 3PL

There are a few benefits to outsourcing your logistics needs to a 3PL. The most obvious being that you will save money on your logistics needs.

Knowledge and Expertise

Working with a 3PL gives you access to people who deal with logistics and freight for a living. You are the expert in your business, so why not learn from the experts in theirs.

Your 3PL can give you insight into potential complications with your shipping and supply chain. This can help you prevent problems before they happen.

They can also suggest solutions to problems that are already occurring. With their experience, they can guide you to the cheapest and best resolution.

Save Time and Money

Working with a 3PL gives you the potential of eliminating your need for spending on warehouse space, technology, and employees. By reducing the resources, you must allocate to your supply chain you can focus more on your core competencies.

Your 3PL can provide everything you need. They can also offer it at a reduced rate since they are purchasing in a much larger volume than you can.

You will also save money on lost opportunities costs and mistakes. The 3PL’s expertise will benefit you in these two areas.

Scale Operations with Increased Flexibility

Your business started very small, as you grew your operations also grew. As you scale your business up, there is a delicate balance between operating costs and profits that must be maintained.

The problem with this is that growth may be limited while you wait for your revenue to increase enough. This puts increased stress on your business as you try to operate on limited resources.

Another common issue is if your business is seasonal. There is high demand for your product during certain times of the years, and non-existent during other times of the year.

You face a warehousing dilemma. Do you overpay for warehouse space so that you have enough during high demand? Or do you pay for less warehouse space and run out during peak demand.

A 3PL can help you with both of these situations. They can ease the pressure of scaling up by making it more affordable and easier. The 3PL can adapt to your increased demand for warehouse space and shipping.

The can also adapt to your seasonal changes in demand. They have much larger warehouse space and can efficiently allocate however much you need during a particular time.

New Market Growth

Entering a new market requires you to build a new supply chain network. This is both expensive and time-consuming.

Instead, you can benefit from the 3PL already having a logistics network in your desired market. This saves you time and labor costs in building a new supply chain.

It also means you can go to market in the new area faster. This results in increased profits and competitive advantage.

Start Outsourcing Your Logistics Today

With all of these benefits isn’t it about time you consider third party logistics for your business. Outsourcing this task can help you optimize your supply chain.

You can then dedicate more of your company’s resources to your core competency. Before you know it, your business will grow, and the 3PL can help you scale.

Request a quote today and find out how much you can save by outsourcing to ATS Logistics!

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