• July 4, 2020
THIRD-PARTY LOGISTICS (3PL) AND ITS ADVANTAGES IN SME AND E-COMMERCE BUSINESSES
Kel Robinson

Running a business can be quite a daunting task. There are so many decisions to make and so many aspects to care for. This can get you pulled into different directions. Perhaps, the worst part of having to take care of end-to-end business is managing time. In reality, the time spent on mailing products or taking orders can be better spent elsewhere. The time spent in pursuing such aspects as logistics to your e-commerce business can be rather invested in growing the business. And that is where third-party logistics 3PL comes in. This article is all you need to know what a 3pl is. Here, you will find the benefits of third-party logistics in SMEs and eCommerce businesses.

What third-party logistics (3PL) is

A simple description of third-party logistics (3PL) is that it is the delegation of certain aspects of the supply chain. Warehousing and shipping are examples of what third party logistics take care of. There is a wide range of services to select from. And this is done by companies to create ease in doing business. Using third party logistics meansoutsourcing the logistics required when conducting consumer-based services. An example of this would be in anonline clothing store. The business may not necessarily have its own logistics branch, which hinders the running of the business. Instead, they assign these tasks to third parties. These third parties do all the heavy lifting when it comes to the supply chain.

How third-party logistics (3PL) works

A third-party logistics company can work in a lot of ways. It is dependent on your desires and what you need. If as a business all you need help with is the delivery, then you have got it. Third-party logistics will help you. And if you need a warehouse to store your goods, done. They will provide you with the space you require. That is the aim of such companies. The goal is to take as much strain as possible from doing business. The structures with these companies offer flexibility and will fit your demands. As a business owner -SME or eCommerce- you have to do what is best for your business. It is like a fill-in-the-gap situation. All your needs concerning the supply chain are lifted from you easily.

Why you need third-party logistics for your business

The following advantages of third-party logistics are the reasons why your business needs third party logistics:

  • Cost reduction

Making use of third-party logistics helps you save a ton of money. These companies have wider reaches and faster delivery times. The frequency of use usually determines the cost of using their services. This is better than attempting to maintain in-house logistics.

An advantage of cost reduction is that money saved means more for business. You get to use the money saved by using third party logistics to grow the business. Also, you can mitigate losses from unexpected circumstances. While using third party logistics, it is on the logistics to figure it all out. Whereas, unexpectedevents that occur with in-house logistics will result in losses.

  • Time-saving

The popular saying that ‘time is money’ holds a lot of weight. Whether you are starting a business or growing one, it is still relevant. There are a lot of things to consider in the running of a business. This is where you desperately need third party logistics. Time used for in-house logistics is better spent doing more productive activities. And time management is a very important concept when running a business. Working with third-party logistics makes running a business much easier. As such, you get to spend your time on more important things.

  • Access to expertise

Instead of floundering around in the dark, use third party logistics. In-house logistics are difficult to start. There are so many things to take care of and plan. It can be stressful and take time. Using third party logistics means you hit the ground running. You also have access to trained services. It is a great way to run your business without hitches. And it will also be easier to scale up. Increasing your business’ reach will be easy to do with a third-party logistics company. If you wish to sell internationally, third parties will handle the paperwork.

  • Mobility and adaptability

An amazing benefit of using third party logistics is mobility. The nature of business is constantly evolving. Products shipped today may not be the same ones shipped tomorrow. If you use in-house logistics, then it would likely be rigid. This would damage the state of business in the long run. It would render your business unable to adapt or slow. And it could also box in your business, which is not a good thing.

Whether you decide to switch products or increase business, it is up to you. With third party logistics, the growth of your business is more assured. As your business starts to scale up, the demand for logistics increases. This is a very efficient way to grow your business. You do not have to spend excessively on trying to get your logistics started. There is also no money lost for reasons such as keeping up with orders.

Challenges surrounding third party logistics

Third-party logistic services are great but there are a few features that might make you reconsider using them. Bear in mind these disadvantages while deciding whether to use third party logistics:

  • Less control

When using third party logistics, it is a given that you have less control. This is because you leave a part of the supply chain entirely in the hands of someone else. Delivery of products can be very important in a lot of cases. One of these cases is when you want to deliver in a specific way.

Another aspect of control is quality control. The delivery of a product can be harsh on the product. It may get to the consumer in a damaged form. There is no guarantee that the unexpected will not happen to the product. When using third party warehousing, you may want to inspect your stock. An inspection could be difficult ifoutsourced.

  • Picking the right 3PL

Using a third-party logistics company comes at high risk. A business owner is trusting them when it comes to brand image. The delivery of the product can also be part of the product. Using the wrong third party logistics company can cost you your customer base.

The effort that goes into searching for the right logistics company is draining. It would be necessary to match their price and level of delivery. What is needed is a perfect union of your business and the logistics. The union of these is necessary or problems will occur down the line.

  • Upfront costs

Employing third-party logistics involves using a skilled and experienced business model. It makes sense, therefore, that it does not come cheap. This is the price paid for efficiency and expertise. Thus, it is an amazing way to start your business but also an expensive way.

The use of third-party logistics is understandable when thinking of scale. To think of scale is to consider the growth that your business will have. You will have more time for other aspects of the business. However, it will come at quite the pretty penny. It is a wise investment nonetheless. Even though it might be high-priced, youget immediate expertise.

Final Thoughts on 3PL

The use of third-party logistics will always be beneficial. Instead of having to juggle so much, you can have experts on the job. While it may cost a lot, it is an investment that is worth it. Your business would go smoothly if you have that aspect off your plate. In the end, it comes down to buying your time back. As emphasized in this article, the time used to flounder around could be better spent. And the benefits of using third party logistics clearly outweigh the cons. It is adaptable, efficient, and trained. These are ingredients for success that you need in your business.

Leave a Reply