7 Reasons Why You Should Outsource to a 3PL
This is a guest post by Darren Hann.
Warehouse and distribution operations are not only complicated but highly challenging on a day-to-day basis due to the multiple processes and risks associated with each process. Substantial expertise and experience are required to manage these logistics operations efficiently. Many Logistics Managers understand the positive impact that an efficient and effective warehouse and distribution system has on their businesses and have outsourced these logistics operations to experts to gain a competitive advantage in the market.
Read why outsourcing your business’s warehouse and distribution operations provides more flexibility, more cost saving, faster order processing and a better order fulfillment rate than most in-house solution.
From a distance, warehousing seems to be a simple operation with only a few processes to manage such as receiving, put-away, pick and pack, and shipping. Yet in reality, there are many more processes such as managing inventory norms, manpower, government regulations, and order fulfillment rates. These processes require substantial expertise, accuracy, and efficiency in order to meet the different expectations of your customers.
At the same time, warehousing and distribution requires heavy investments in both manpower and infrastructure with high level of IT-infrastructure to perform the operation with perfection. This can be challenging for businesses, as it requires a lot of capital and resources. And this “locked-up” capital could be used for other purposes such as new product development or acquisitions. 3PL providers understand the sophistication and complexity of warehouse operations and are specialized in providing effective and efficient logistics services at high levels to their customers.
Over the past 20 years, many managers have experienced the positive impact that a more effective and efficient warehouse and distribution system can have on their overall supply chain operations. Due to the introduction of numerous advanced models like Just in Time, offshore warehousing, cross docking, same day delivery and return, and inventory control and automation, the operations have become more complex and very challenging to manage. Customers have often discovered that the best solution to manage these challenges is to outsource the operation to experts rather than owning and managing them in-house.
The following is a list of 7 compelling reasons why you should consider outsourcing your warehouse and distribution operations to an expert 3PL.
1) Eliminate the High Initial Investment
Setting up a warehouse and distribution facility requires a large amount of capital. Warehouses require a large amount of space (with high rent), heavy racking, material handling equipment, high quality IT-infrastructure, and other electronic assets. 3PL providers have already invested in advanced facilities and manage them with a high level of expertise. Your business benefits as the 3PL provider’s investment is shared across multiple customers over long periods of time.
2) Control Your Warehousing Cost
Outsourcing provides you with greater flexibility to control your warehousing and logistics costs. You don’t need to pay for empty spaces or your seasonal inventory throughout the year. Your business benefits as you only pay for the space you use – no less and no more.
3) Decrease Your Distribution Cost
3PL providers combine volumes from many customers and use these volumes to bring per unit rates down. The rate benefit gets passed on to the customer thus lowers customers’ distribution costs.
4) Monitoring Is Better Than Managing
Outsourcing your warehouse and distribution requirements provide you with more time and flexibility to monitor your operations from a distance. It frees your time and energy to focus on your core tasks and to make strategic decisions which are good for your business in the long run.
5) Improve Your Efficiencies with a Warehouse Management System (WMS)
A Warehouse Management System (WMS) is the brain of a warehouse. Purchased individually, a WMS can be quite expensive. 3PL providers are well aware about the importance of a WMS and provide this functionality to every customer as part of the logistics service. For your convenience, most warehouse management systems can be integrated with your main ERP which means your inventory is just one click away. By using the 3PL provider’s WMS, you will receive detailed, customized management information system (MIS) reports at any time and efficiently control your inventory without additional costs.
6) Reduce Your Risk
When you outsource part or all of your logistics requirements, you shift some of the risk associated with warehouse and distribution operations to the third-party logistics provider. This might be the biggest advantage of outsourcing warehousing and distribution operations. For any new or changed requirement, operational failures, etc., your 3PL provider takes the accountability.
7) Utilize Value-Added Services
Value-added services like kitting, labelling, bundling, packing, and assembling come with the package. Whether you use it or not initially, you always have an option at a later date to add new value-added services as required.
A 3PL provider’s main focus is to provide an efficient warehouse and distribution solution that meets the varying needs of their customers. With the wide range of warehouse facilities a 3PL provider can leverage from, and the chance to make use of the latest technology, 3PL providers have an advantage to deliver an incredible range of services to help importers and exporters succeed.
This was a guest post by Darren Hann.
Darren Hann is a Commercial Manager at BCR Australia, one of Australia’s largest freight forwarding and third party logistics companies. BCR services all major cities in Australia, including Brisbane, Sydney and Melbourne.