Logistics are getting more complex every day as businesses compete to meet the increasing demand and high expectations of customers! Therefore, 3PL providers have become a business necessity to ensure a seamless supply chain management process and to help companies stay ahead of the competition. But what exactly is 3PL?
3PL refers to the outsourcing of logistics activities to a third party, which includes inventory management, transportation, warehousing, order fulfillment, etc…, to save money, increase efficiency, and provide great customer experience.
Whether you run an e-commerce business or operate a B2B company, whatever industry you’re in, you must start thinking about leveraging the power of a 3PL partnership.
There are many 3PL partners out there, but which 3PL partner is considered the perfect fit for your business needs?
In this article, you’ll learn which aspects to consider when choosing a 3PL partner that will help you increase efficiency, control costs, and improve customer experience.
Why is it important to pick the right 3PL?
Save money and time
A business’s success relies on a certain level of cost and time efficiency. 3PLs help you achieve cost efficiency through outsourcing your logistics activities to them and using their resources such as trucks, warehouses, and technologies instead of owning them.
For timesaving, 3PLs that automate the supply chain processes will be able to reduce the time needed for processing orders, improve your fulfillment rate, and help your business provide express delivery for your customers.
Scale your business and meet demand peaks
Keeping up with business needs is necessary for growth. The right 3PL partner will utilize resources according to your business situation. When there is low demand, there are no superfluous investments and unutilized resources, and when there’s a demand peak, you can fulfill the business requirements with more resources.
Expand to new markets
Working with a 3PL partner makes penetrating a new market an easier task. The role of the logistics partner is to enable business growth by expanding businesses into emerging markets and new regions. Thanks to 3PL, you can save the time and effort needed to manage distribution centers and warehouses in your new markets. And there is no wasting time or effort to understand the logistical nuances of your new market.
6 Aspects to consider when choosing 3PL Partner
It’s important to consider the following aspects before entrusting your business to a 3PL partner: location & geographical coverage, pricing, packaging, scalability, and technology.
A 3PL with warehouses and fulfillment centers located in all the central locations throughout the Kingdom can help you extend your fulfillment reach and ship products seamlessly.
The fulfillment centers’ locations should match your distribution plan, and they should be close to your high consumption areas. Hence, this enables you to decrease delivery times to remote areas and deliver more efficiently to vital areas. This efficiency can be tenfold if the 3PL has its dedicated transportation fleet!
Pricing transparency is easier said than done. There are many hidden fees that you can find yourself paying for when a 3PL charges you, such as WMS fees and administrative fees.
Usually, a 3PL charges the customer for:
An efficient third-party logistics partner’s price shouldn’t differ from the one agreed upon in the contract, detailing the amount charged and how it will cover all the related services.
Note that the prices for each service vary widely between 3PLs, you need to choose the right 3PL by considering the costs for the services you’ll use the most.
Your product marketing strategy should include customized packaging that is tailored for your brand. Your logistics partner should enable you to provide your customers with a unique unboxing experience. Additionally, the world is heading to sustainable practices; your 3PL should provide you with sustainable packaging options to keep up with the global trends.
When you are thinking about your 3PL partner’s ability to accommodate your business expansion and growth plans, you need to ask yourself these questions:
- Does your 3PL offer cross-border shipping?
- Is your 3PL familiar with local regulations and customs clearance in the Kingdom?
- Is your 3PL equipped with cold chain facilities to meet health and safety standards for F&B storage?
- Does your 3PL have enough warehouses, a transportation fleet, and the right technology to meet the unique needs of your supply chain?
- Is your 3PL’s staff trained to handle these assets and technology professionally?
“The right third-party logistics partner will help you scale”
If your products need special handling, or your business uses its own proprietary technology or platforms, you should consider choosing a flexible 3PL partner. Flexible 3PL partners can personalize integrations with your technology for a seamless experience and can provide you with value-added services such as custom packaging. Also, they could add more services to meet high-demand seasons such as extra physical storage space or allocating more resources to meet the demand.
The main reason to work with a third-party logistics provider is to save the investment costs in warehouse management systems (WMS) and transportation management systems (TMS).
Warehouse management system (WMS)
WMS software is built to improve the warehousing, distribution, supply chain, and fulfillment processes inside a business.
A 3PL, that has an advanced WMS, will help you make informed data-driven decisions based on real-time inventory availability and sales channel data. In addition to using advanced technologies like barcode scanners, WMS will help the shipping team be much faster at picking and packing orders, which means faster order fulfillment.
Transportation management system (TMS)
As part of a wider Supply Chain Management (SCM) system, the Transportation Management System (TMS) is software or a platform that utilizes technology to help companies plan, execute, and optimize the transportation of goods.
Using advanced TMS, your 3PL provider will be able to reduce freight expenses, track deliveries in real-time, improve customer service, and enhance warehousing efficiency.
Nowadays, WMS and TMS software are a must for seamless fulfillment. You should make sure that your 3PL is using WMS and TMS technologies for planning your inventory and your procurement processes.
A third-party logistics partner is the cornerstone for the success of your business, especially since they are your final interface with the end customer.
It’s imperative to pick the right 3PL partner to help you grow your business and further develop the trust of your customers in your brand.