As companies grow they encounter many challenges associated with an increased customer base, new locations, updated manufacturing methods, and other factors. For some companies, meeting these challenges with investment in capital and overhead is ultimately not the most financially viable option. Many times, it’s a better choice for these companies to look outside their walls to 3rd party logistics services providers to deliver the enhanced functions that they need to continue growing. Logistics is certainly one of those functions that can benefit greatly from choosing the right third-party partner. This is where 3PL comes in to play.
What is 3PL?
3PL stands for ‘third-party logistics’. This refers to a variety of logistics services and processes that are provided to a business by an external company, including inventory management, warehousing, and fulfillment. A business may choose to work with a 3rd party logistics services provider for a variety of reasons, such as wanting to reduce costs, improve efficiencies and expand capabilities. 3PL services are usually flexible and scalable based on the needs of the business, meaning that they can be utilized on an as-needed basis, or as a long-term solution depending on the goals and objectives of the business.
Why Choose a 3rd Party Logistics Service Provider?
Whether you are B2B, brick-and-mortar, omni-channel retail, or direct to consumer e-commerce business, there are many reasons why companies choose to go the 3PL service route. Often, as a company grows, the need for warehouse space increases beyond that business’ ability to manage it. 3PL warehousing can be a good option for companies facing storage capacity issues. Other companies may be challenged with increasing transportation costs and investment in equipment and vehicles. The large fleets of modern vehicles and equipment that are available through 3rd party logistics services providers are often a much more cost-effective solution. Then there are US businesses looking to expand into the Canadian market – a good 3PL will have the depth of experience to help solve many logistics challenges involved with these scenarios.
Other reasons why companies may choose to partner with a 3PL include challenges with customer service, order fulfilment, returns, order tracking, technical services, inventory management, and more. As you can expect, the more of these struggles that a company faces as they grow, the more value a 3PL partner can provide.
Benefits of 3rd Party Logistics Services
3PL logistics providers can deliver a great deal of value to companies such a direct-to-consumer (DTC) ecommerce retailers that are dealing with the challenges associated with rapid growth or changing market conditions. Here are some of the main benefits that can be realized by utilizing 3PL logistics.
3PL providers have vast networks of resources across the country, and the globe. This includes warehousing space, trucking and transportation fleets, human resources, and technology that your company can take advantage of without the necessary massive investment in overhead and capital setting this all up on your own would require. This level of flexibility adds up to significant cost savings which have a big impact on the bottom line.
The level of service you obtain from a 3PL provider is entirely up to you, and can be adjusted to accommodate different levels of business due to seasonal or cyclical demands. For example, if your company sees a big surge in orders every year for the holidays, 3PL companies can scale up services and labor accordingly to meet high demand needs, and then go back to normal levels once the surge subsides.
In addition to the savings in capital costs, many companies see a significant savings in time through 3PL services. This can take the form of lower cost per unit shipped, faster transportation and reduced delivery times, and the ability for the whole organization to devote more time to its core specialties, including product development, customer service, sales & lead generation, or market growth.
Improved efficiency means greater return on your investment.
In addition to business-side benefits, there are many customer-facing benefits to 3PL services. Companies can expect to achieve faster and more reliable delivery times, improved tracking and order status communication, reduced chance of damage or incorrect product packing, and more. All these benefits make a big difference in overall customer satisfaction and retention, while improving the average lifetime value of customers and your brand image.
When an American company expands beyond its country’s borders into Canada, a new set of challenges arise in the form of regulatory compliance, customs clearance, and communications. 3PL providers are able to assist companies with a smooth and efficient entry into new markets through the use of their established & extensive Canadian networks.
For anyone considering a move into Canadian markets, the guidance available from experienced 3PL logistics providers is extremely valuable.
Services Available from 3rd Party Logistics Service Providers
While virtually any logistics function can be done by major 3PL providers, these are the most common logistics processes and services available from leading Canadian third-party logistics companies.
- Warehousing & Inventory Management
- Order Packing & Fulfilment
- Value Added Services
- Certified Technician Services
- Transportation & Shipping Coordination
- Order Tracking & Status Communication
- Customer Service
- Returns Processing & Reverse Logistics
- International Logistics & Customs Expertise
- Custom Solutions
As your company continues growing, it’s inevitable that you will encounter additional challenges related to rising costs, increased logistics complexity, and changing customer needs. 3PL logistics can be an excellent way to address these challenges before they become a hindrance to the continued success of your business. Identifying the areas where 3PL service can bring the most benefits to your company may be difficult, but with the right 3PL partner, you’ll get the guidance and direction you need to implement an effective plan. The experts at SCI will work with you every step of the way to identify the biggest opportunities for your company to take advantage of with 3PL services.
Contact us today and we will be glad to answer any questions you have about how 3PL logistics can bring your business forward and achieve your goals.