3PL stands for third-party logistics, and it is one of the most important elements when it comes to business and warehouse management. Shipping product is a major part of the most modern industry since companies now need to reach clients and customers all across the world. If you are unable to keep track of your product, where it travels to, and in whose hands it is, then you will lose money rapidly from lost items, theft, and even general oversight.
This is why 3PL is so significant. When you engage in 3PL, you hire a separate company to help you manage the logistics of shipping and storage. You essentially outsource some of your operations to a business dedicated to keeping your product safe and ensuring it arrives on time to your consumers. However, 3PL is not for every business. It is important to weigh the pros and cons before deciding to outsource your operational logistics to another.
The Pros of 3PL
Working with a 3PL provider offers numerous benefits to businesses. Outsourcing logistics is a great way to improve the shipping process, and can also free up time and resources for other matters. Here is a shortlist of some of the many pros of 3PL.
• Efficient Scaling: A major problem for the industry is dealing with the fluctuation of business throughout the year. The demand for a product will not be the same in June as it is in December. Using 3PL helps simplify the process of scaling up or down to accommodate demand
• Cost Reduction: 3PLs often possess far more clout with warehouses and other transportation industries than the average business. This allows them to get better deals when handling shipping and can reduce the overall amount you spend each year on storage
• Market Testing: Because a 3PL will manage warehouses and associated shipping staff for you, you can test new markets without investing your own time or resources
• Risk Mitigation: When mistakes or delays happen while shipping goods, it is the 3PL’s responsibility to make alternate arrangements, not yours. This means they are assuming the risk for you, and you can reap the benefits and not sacrifice resources trying to straighten out issues in the shipping chain
• Simplified International Logistics: One of the final benefits of working with a 3PL is that they can help simplify the process of shipping products overseas. The 3PL will handle international storage, customs, having the proper paperwork, and will also take care of any issues which occur at the borders.
Overall, it’s easy to see why many companies choose to hire additional help.
The Cons of 3PL
Of course, there are also some potential downsides to consider. The biggest three are:
• Distance: Sometimes a 3PL will choose to store your product at a location that is not easily accessible, which can make it difficult to perform quality control.
• Investment: Hiring a 3PL takes a large investment at the outset since you must pay the company. While the service pays for itself over time, it will still cost money at the beginning that smaller businesses might not have.
• Less Control: Finally, when you hire the wrong third party logistics company, you have less control over the delivery process. While this is great for some businesses, it can be a major problem for others.
Working with a 3PL can be a great asset or detriment to a business depending on size and scope. If you are interested in working with one, be sure to choose a quality company like American Manufacturing Solutions so you can get the pros with none of the cons. Contact us today!