90% of Fortune 500 companies are outsourcing their logistics and supply chain management operations to Third Party Logistics Companies, or 3PLs. The reason is simple: managing the flow of physical products internally throughout a company’s supply chain requires an enormous investment of time and infrastructure (money) to function properly. Outsourcing activities such as distribution, transportation, and logistics management allows a company to concentrate on the core objectives of its business, specifically growing and satisfying their customers . There are numerous ways that partnering with a trusted 3PL can benefit your company. This article will highlight the two most important ones: saving time and saving money.
3PLs have already invested in the research necessary to understand the complexities of logistics for most products and industries. Companies with logistics needs can capitalize on this time investment by 3PLs by parntering with a trusted 3PL.. Regardless of the challenges a company is facing , chances are a 3PL has dealt with them before. This experience can save companies millions of dollars as well as countless hours of planning and execution strategies, investing instead in meetings with the 3PL to help them understand your business and share ideas from their experience. Opting to outsource distribution logistics can guarantee that companies are supported by an appropriately sized staff and infrastructure to handle all of their fulfillment needs during any season. Unlike most companies, a 3PL has the flexibility to shift labor as needed between their customers giving each one the ability to ramp up during peak times or scale down when demand decreases.
Reducing Costs with 3PLs
In the logistics industry, labor is one of the largest expenses. The average logistics manager in the U.S. earns more than $64,000 annually before the additional employment costs of training and benefits packages. The cost of hiring and housing a full logistics staff of drivers, managers, and warehouse workers is significant. By working with a 3PL, companies can see a drastic reduction in labor expenses.
A great logistics management system requires more than just people. It requires sophisticated technology aimed at increasing supply chain visibility to distribution and transportation and automated end-to-end processes for everything to run smoothly. This technology helps companies save money by avoiding unnecessary inventory overages or shortages and loss of visibility to product in transit. 3PLs have invested heavily in state-of-the-art technology for warehousing and transportation management . The favorable carrier rates 3PLs receive are usually passed onto their customers reducing logistics costs further. 3PLs also offer variable space contracts, which give companies the option to pay only for the square footage they use on a month-to-month basis. By outsourcing the logistics portion of a business to a 3PL, companies are able to gain access to the latest technology, optimized networks and tested supply chain management processes at a fraction of the outright purchase costs.
Choosing the Right 3PL
Of course, not all 3PLs offer these types or levels of services. Regardless, they should all bring experience, technology, scalability, cost savings, and efficiency. If your company is spending too much time or money on managing logistics, it may be time to bring in a 3PL expert. Choose one that offers tailored solutions dedicated to saving their clients’ time and money. A great choice could be Langham Logistics.