Firstly, we have to know what’s the Third-party logistics?
Third party logistics (3PL) are companies that offers outsourced logistics and supply chain management to another companies. The 3PL service may be a single provider, such as transportation or warehouse storage, or it can be a system wide bundle of services.
Why companies deal with 3PL providers?
Outsourcing supply chain services to third party logistics providers gives businesses the ability to focus on primary functions and their core competencies. So, When companies experience growth, they often run into challenges meeting the demand of their supply chains Forming these business partnerships allows retailers and manufacturers to more easily expand operations while increasing efficiency and reducing costs, Whether in inventory management and storage, contract packaging, or shipping. with the following video you can also know more about how 3PL works.
Reasons to use 3PL companies
- Save money & time
Saving time and money in any business is really important, so, 3PL companies will offer to the organization not to spend money on warehousing, transportation and hiring professional labor. Additionally, they save the hassle of paper work, customs and billing.
- Resource network
Third party logistics providers have a vast resource network like: in-house supply chains. With 3PL provider network, supply chains can be expanded quickly, efficiently, and in a cost-effective manner.
- Market expansion
the advantage of working with a 3PL provider is Having access to distribution centers and warehouses in various regions allows companies to grow in new areas by being able to ship goods efficiently to anywhere in the world.
- Scalability & flexibility
Depending on what your needs are, 3PL providers have the ability to scale space, labor, and transportation based on the fluctuation of your inventory. Whether you’re dealing with seasonal inventory or new product releases, 3PLs can help provide adequate space and resources between your busy and slow times, giving you maximum amounts of flexibility during any time of the year.
From the successful examples for 3PL companies are:
DHL, Kuehne + Nagel, DB schenker Logistics. Those companies are from top 10 global 3PL companies in supply chain and logistics with millions of dollars profit.
Finally, Companies would actually save more money and become more efficient with their supply chains by partnering with an experienced 3PL provider with an extensive network of resources and warehousing locations. So, it’s really important to choose carefully your 3PL partner because it could be your company image with the customer.