Benefits of Using 3PL Business

In the increasingly competitive global marketplace fraught with sudden economic and financial challenges, more and more companies are streamlining operations to improve efficiency and save on cost. Outsourcing logistics and supply chain functions provide the following benefits:

  • Focus on core competencies 

Outsourcing logistics allows companies to focus on core businesses and strengths. It saves company’s limited resources to concentrate on what it does best.

  • Savings on capital expenses

Organizations can save considerable amount of capital expense that may be required in acquiring logistics assets, networks and facilities like inventory management systems and the like. As an alternative to having to have these assets, companies often chose to outsource these requirements by outsourcing logistics, and instead use their resources in developing their core processes.

  • • Economies of scale

Small or mid sized companies may not always have economies of scale to economically manage logistics operations. Their own internal capabilities may also prevent them from accessing provincial markets. Outsourcing logistics is an ideal solution to augment a companies own capabilities.

  • Enhanced logistics capabilities and efficiencies

Enhanced logistics capabilities have allowed companies to reduce intermediate stocking, allowing them to follow efficient methods like cross docking or merge in transit. Further the logistics companies have been able to develop and provide enhance tracking and tracing capabilities to their client enabling them to achieve better coordinationand management of inventories and goods in transit.

  • Enhanced technological capabilities and flexibility

The use of information technology has enhanced the efficiency of logistics operations. However it may not always be feasible or for companies to invest in new systems or upgrade their existing system. However, third party logistics providers are expected to be always at the cutting edge of these new innovations ensures you against such technological changes, as they often invest in these technologies to provide competitive services.

  • Best practices    

Organizations may not always follow best practices. Outsourcing logistics to third party logistics allows companies to implement best practices. This allows an organization to achieve best performance.

Considering that logistics accounts for an average of 7-10% of total costs, and that it has the capability to make your product available, it indeed makes good business sense to engage a 3PL.