Introduction
To survive and thrive in today’s business world, you must be able to deliver whatever your customers want, whenever and wherever they want it.
Indeed, rapid and reliable order fulfillment is the key to ensuring customer satisfaction and bottom-line growth for companies of all sizes, across all industries.
However, as your company evolves and expands and as business conditions fluctuate, you may find that it becomes increasingly difficult to manage your warehousing, inventory, distribution, and fulfillment processes – which can become a source of operational headaches and soaring costs.
Additionally, your team may prefer to focus on their core competencies – such as product development, sales and marketing, or customer support – rather than devoting all their attention to the complicated, time-consuming task of fulfilling customer orders.
For these reasons, many companies look to external experts – third-party logistics (3PL) providers – to help them handle their end-to-end logistics operations. A recent study revealed that 86% of US-based Fortune 500 companies use 3PL providers for various logistics and supply chain functions.
A growing number of organizations across various industries are discovering that outsourcing their warehousing, inventory management, and order fulfillment to a 3PL can have many business benefits such as improving customer service, operational efficiency, profitability, and market share.
The question is: Should your organization work with a 3PL provider?
In this guide, we will give you all the information you need to know about 3PLs – so that you can decide if would like to partner with such a provider and, if so, you can choose the right 3PL for your business.
Some 3PLs offer a complete suite of integrated, end-to-end logistics solutions, while other players specialize in specific areas or industries.
Most 3PLs can deliver a variety of logistics solutions – and each company can pick and choose which solutions they want, customize those solutions to meet their business needs, and change, adapt, and add solutions as their business scales and grows.
The array of solutions that 3PL providers offer includes:
Partnering with a 3PL provider can deliver many different business benefits and can help fuel your company’s long-term development.
Indeed, by outsourcing your warehousing, inventory management, and fulfillment operations to a 3PL, you can:
Additionally, 3PLs – as they may be carriers themselves or have deep relationships with major carriers – can help you negotiate the best possible shipping rates and dramatically decrease fulfillment costs.
Your 3PL provider will also uncover ways to cut inventory, storage, and other costs across your end-to-end supply chain by streamlining processes, offering volume discounts, bundling 3PL services, and other strategies. For example, VAHDAM India – a major producer and distributor of tea products with over 2 million customers globally – reduced its fulfillment costs by 15% (while sustaining 400% YOY sales growth) by partnering with a 3PL, Amazon Multi-Channel Fulfillment (MCF).
- Shipping speeds, with some best-in-class 3PLs delivering orders as fast as one day.
- On-time delivery rate, with the top performing 3PLs achieving rates of greater than 97% in this area.
This superior delivery performance translates into higher customer satisfaction – which ultimately leads to business growth.
These 3PL experts often bring with them a deep knowledge of current industry best practices, and will work with you to infuse these practices into your business processes – thereby ensuring your logistics operations are running in the most efficient and cost-effective manner.
Having the right 3PL personnel in your corner will make your logistics headaches disappear and will free your team up to focus on the areas of your business that matter most to you, such as product development and sales and marketing.
Also, through your relationship with your 3PL provider, you will be connected to a vast, global network of supply chain resources (including specialized facilities, equipment, and employees) that you can tap into whenever the need arises (which may be daily, monthly, yearly, or during certain seasons). Having access to this network will eliminate your need to maintain excess capacity and overhead costs.
- Calibrate and scale your logistics operations to handle fluctuations in supply and demand due to seasonal spikes, shifts in government regulations and fuel prices, or other dynamics.
- Manage volatility and disruptions across your end-to-end network.
- Expand into new markets by leveraging your 3PL’s established network of facilities and partners to help you reach customers and launch new business lines around the world.
For example, working with a 3PL can accelerate your adoption of cutting-edge AI and ML inventory management technologies, which can enable you to more accurately forecast demand and effectively position your inventory as close as possible to your customers.
By implementing new technologies and processes, a 3PL can help you gain real-time visibility and control over your end-to-end logistics operations – so that you can identify and address inefficiencies across your network, increase the volume and velocity of the shipments your company is handling, and improve customer experience as well as bottom-line results.
Now that you have a good grasp of what 3PLs are and the business impact they can deliver, you need to determine if your organization could benefit from enlisting the services of a 3PL provider.
Below are some telltale signs that your business needs a 3PL partner:
Furthermore, a 3PL will work with you to drive cost optimization across your organization by managing your inventory, shipping, and warehousing operations as efficiently as possible.
Once you’ve decided that your business could benefit from a partnership with a 3PL, you need to begin the process of evaluating the numerous providers out there and choosing the right one for your business.
During your evaluation and decision process, here are some key factors to consider:
Amazon, for example, has built the world’s largest fulfillment network – with over 200 fulfillment centers encompassing more than 200 million square feet of space, over 200,000 operations staff and over 85 aircraft. By partnering with MCF, you can gain access to this global network, and use it to rapidly and reliably deliver for your customers around the world and across your different sales channels.
- A proven track record of delivering on time, in full for customers around the globe and across different industries.
- Shipping speed options (such as one- or two-day delivery) that meet your needs.
- The capability to handle increased or decreased volume when your business experiences sudden surges or drops in demand.
By devoting time to conducting in-depth research and considering the factors highlighted above, you can find the right 3PL for your business.
Working with right 3PL partner can truly transform your business, empowering you to drive long-term bottom-line growth by:
- Keeping your end-to-end logistics operations running as efficiently as possible.
- Keeping your warehousing, inventory management, and fulfillment costs down.
- Keeping your customers happy by delivering on time, every time.
