The money-saving solution 90% of Fortune 500 companies rely upon!
As a manufacturer, you know that profitability, quality control, and customer satisfaction are three of the many factors that are important to the growth of your company. And like many companies, you may have started out doing everything yourself. But, as you grow, should you keep doing business the same way? Is it time to outsource the warehousing and distribution end of things? Let’s look at the big-picture question of “What is 3PL?”
3PL Definition
3PL stands for third party logistics. These companies provide integrated warehousing, distribution, and fulfillment. And by integrated, we mean integrated with each manufacturer’s own data feeds (API, EDI, etc.) as well as fully understanding your needs.
Basically, a 3PL company warehouses your product then ships it wherever your feeds direct. You make the sale; the third party logistics company does the rest. Many 3PL providers offer additional services, but logistics is the common denominator.
Consider today’s 3PL provider as a manufacturing support service, an expert in supply chain management, and, ultimately, a nimble and valuable extension of your own business.
3PL Advantages
Here are at least five basic advantages to using a third party logisitics company.
1. Lowers capital commitment
By outsourcing warehousing and shipping, you eliminate the need to own your own warehouse, equipment, and transport facilities—and the required maintenance that entails. This enables you to focus your dollars in other areas more central to your business.
2. Lowers personnel costs
A 3PL company already has personnel in place, with all the associated medical, governmental, and HR requirements met. Their employees are knowledgeable and trained in receiving, warehousing, picking, packing, and shipping. You will reap their knowledge immediately.
3. Lowers shipping costs
3PLs know shipping. Because of the large volume of products they move on a daily basis, they’ve negotiated deals with transport companies that you can’t hope to match. They scrutinize bills for errors and bill you monthly, not daily, so you have less paperwork. And if there are delays in the shipping pipeline due to unforeseen circumstances, 3PLs are used to finding alternate ways to get your products shipped out.
4. Ability to scale up or cut back as needed
Business is often seasonal. Using a 3PL can allow you to ride those waves without the worry of adding or releasing temporary employees.
5. Allows you to focus on key areas
Only you can do your own product development. By letting a 3PL handle the distribution end, you can concentrate your resources on core areas of your company. So, when you contract with a 3PL company, you’ve in essence become an instant shipping expert without taking your eye of the prize.
Is 3PL for everyone?
Now that you know the answer to the question of, “What is 3PL?” You can see the 3PL advantages are many. But it is an investment on your part. That means it may take a while before you reap the cost-saving benefits. If there are delays in delivery, for whatever reason, your customers will look to you for the resolution, as a 3PL is invisible to them. And if there are issues with the merchandise and the 3PL is located some distance away, it will require a trip on your part to check things out.
However, if 90% of Fortune 500 companies find it profitable to use third party logistics, you probably will too.
If you are interested in finding a 3PL provider, consider our company, Petra Industries. To start a conversation and see the advantages we bring to the table, read more here. And if you’re a manufacturer who is also seeking a distributor, we do that too. Dive in here to discover all the various services and channels of distribution Petra offers our vendor partners. We hope we can do business with you soon!
