The Advantages of Outsourcing Your Logistics Operations to a 3PL Provider

Apr 28, 2023 Brihony Tulloch Brihony Tulloch

The core strengths of your products, services, and human resources are the reasons your company is profitable. Your most loyal customers stick with your brand because you've established a proven track record of delivering quality products on a global scale, on-time international delivery, and commitment to excellence while being a leader in your chosen market niche.

Sticking to what you know is an intelligent business decision. So as you reach the enviable position where business is booming, and you need to expand warehouse capacity, back-end IT systems, and extra staff to manage everything that goes with international logistics at scale, it's time to decide where your focus should be. Should you deviate from your core business to expand these costly in-house logistics or outsource these critical services to an established 3PL warehousing provider? Making the right call can mean major benefits for your business so you need to make sure you find the right partners to work with.

Continue reading to learn more about just some of the advantages you can gain by partnering with leading logistics operations providers.

3PL Defined

In short, 3PL is an acronym for Third-Party Logistics, the systems, and human resources devoted to the organisation, storage, and delivery of your products to consumers. Functions related to activities after purchase and payment fall under 3PL, including order picking, packing for shipment, trucking, vehicle maintenance, driver staffing, warehouse receiving, restocking, and customer returns/refunding.

These are all time-consuming, capital-intensive functions and can often be a drain on your budget, which could be better spent re-investing in your own core business. Let's drill down and discuss a few advantages that you can expect by outsourcing this vital part of your business.

Improve Delivery Reach

A global 3PL provider may already have the market penetration that allows you to piggyback on its existing footprint, saving you costly freight and fuel expenses. Your international shipments benefit from established freight lanes, lowering your cost per kilo/pound, and you can scale up and down as volume demands. This is especially important for e-commerce firms that experience seasonal ordering peaks and valleys. Additionally, regional warehouses maintained by 3PLs mean your products are safely stored closer to customers than you would otherwise expect with your in-house logistics.  This reduces shipment time, expedites the return process, and increases customer satisfaction, which is what every business owner wants.

Lower Costs

You can expect to save money in several areas. First, you can reduce your real estate footprint, as you no longer need to lease or own expensive land and warehouses, with all the associated taxes, insurance, and utility expenses accompanying those investments.

Also, the more your business grows, the more inventory you'll carry, leading to more investment in costly real estate. Instead of retaining staff skilled in your core business, you'll also be hiring and retaining real estate professionals in multiple locations to help you manage your business properties. This can often be an overly complicated issue that many business owners might prefer not to engage in.

Finally, running your logistics operations also includes hiring security personnel, truck drivers, forklift operators, IT system staff, and warehouse personnel. Maintaining a fleet of trucks requires carrying spare parts inventory, maintenance work and facilities, insurance, and license fees. Truck drivers must be screened, hired, trained, and certified. Expect driver turnover to be high since truck drivers are in a competitive market of their own, with many companies racing to match pay rates to retain drivers on staff.

Outsourcing these, and other, requirements allows your core business to run leaner and more efficiently, leading to improved customer satisfaction and higher profit margins as you return your focus to the products that enabled your company to grow internationally in the first place.

Improved Scalability

As your sales volume changes due to seasonality, weather challenges, and changing consumer trends, you'll avoid the resulting peaks of inefficiency due to the high logistics-related overhead associated with in-house ownership. Enjoy the flexibility that partnering with efficient third-party logistical support affords you. Take advantage by continually operating optimally and watch your customer service metrics maintain steady favorable ratings. Once your market nears saturation, and you need to find new untapped territory, a 3PL provider already has the foundation and global resources to pivot and grow with you. Barriers to entry into these new markets seem less of a challenge with a competent shipping and warehousing partner.

Use Specialised Logistics Expertise To Your Advantage

Ultimately, not every organisation is well-positioned to execute flawless international logistical support and service. By relying on 3PL providers that are focused on warehousing and other facets of logistics, you can concentrate on delivering the products and services customers have come to expect from your brand. Logistics isn't a one-size-fits-all solution, as each company has specific requirements, and the partner you choose for this function should be flexible enough to meet these diverse demands. As your company grows and prepares for expansion into new markets, choosing a logistics partner with an existing presence facilitates seamless integration and positions your company for continued success moving forward.

Brihony Tulloch is a professional content manager from Melbourne, Australia. Enjoys playing the cello. Dreams of visiting the Scottish Highlands and exploring abandoned castles. Hates bad grammar and poor spelling.