When people hear the word “outsource”, they tend to have a stereotypical image that pops in to their head of gigantic corporations hiring massive workforces in foreign countries. However, the reality is that outsourcing can be done by businesses of all sizes for a wide variety of reasons, especially in the world of logistics, in order to achieve an equally wide variety of benefits. In this article, we’ll take a look at some of the common challenges that businesses face at different stages of their evolution, and how leveraging an outsourced 3PL logistics provider can help solve the problems and set the stage for further success and growth.
Logistics Challenges Change as a Business Grows
Regardless of the nature of the product or service, small businesses often face common challenges when it comes to logistics. Since they are often dealing with a proportionally smaller customer base or volume of orders, they may not necessarily need their transportation resources to be constantly available. Some small businesses may only need to physically move product or supplies in stages, and not all day, every day. Warehousing and storage capacity are also common issues, with limited funds available with which to purchase or lease space. This limited space often translates in to great urgency when stock is depleted and rush shipments are required to replenish it.
In addition, small businesses often rely on members of their team to fill multiple roles depending on the needs of the business at any given time. It’s not unusual for some employees to be serving customers on a showroom floor at one moment, and the next be packing product and loading a truck for an urgent shipment. While the team member may be doing a fine job of both tasks, more often than not they are not as efficient as a trained specialist would be in one of those roles.
When a company is successful enough to grow to what is considered a medium-sized business, they usually reach a point where some of the usual challenges faced by small businesses are no longer a concern. However, they typically have been replaced by a new set of logistics issues to deal with. For mid-sized businesses, these challenges commonly include warehousing, which is a balancing act to avoid the opposing problems of under-capacity and over-capacity.
Mid-size businesses can also face challenges when seasonal changes in business cause order volumes to fluctuate between full truckload shipments and less-than-truckload shipments (LTL). This presents the problem of inconsistent transportation costs and can add a great deal of unpredictability, especially as the business may choose to expand to serve new markets or geographical areas.
Large companies, such as corporate franchises and enterprise-level organizations, are still not immune to some of the challenges faced by small and mid-size businesses, but also must be wary of many other factors that can impact the success of their logistics efforts. Cost savings is a major concern to businesses of all sizes, but when you begin dealing with multiple international markets, dozens of physical locations, massive warehousing requirements, and round-the-clock transportation of goods, this factor takes on a whole new level of impact. Logistics costs for some large corporations can hit a high percent of their overhead, so any opportunity to achieve greater efficiency is worth seriously considering.
Another major logistics factor that has substantial effects on large businesses is the consistency and reliability of their logistics operations. When dealing with large volumes of products, it’s absolutely critical that each and every shipment is delivered in the same manner, with the same level of care and attention in order to ensure the most consistent end-user experience regardless of where the final sale is made. Logistics has a much bigger impact on customer satisfaction than many people realize, and because of this it is often one of the most underestimated facets of many businesses. On the plus side, this also means it is one of the biggest opportunities, if your company is willing to invest in the right things to take advantage of it.
No matter the size or scope of your business, there are many advantages to be gained by partnering with a third-party logistics (3PL) service provider. These advantages may differ based on the nature of your industry and the type of products or services you provide, but in the end, they are too valuable to ignore.
Small Business Benefits from Outsourcing Logistics
There are many benefits that small businesses can realize through 3PL logistics. A few of the more notable benefits include ability to leverage flexible on-demand storage and warehousing, alleviating the pressure of having limited storage space in your facility. 3PL companies also enable same-day shipping, as well as fulfilment and inventory management for e-commerce businesses.
Mid-size Business Benefits from Outsourcing Logistics
In addition to all the benefits that small businesses can realize with 3PL services, mid-size companies also have the ability to utilize warehousing resources in distant locations in order to better serve growth segments or emerging markets. E-commerce companies are particularly fortunate when it comes to leveraging 3PL services to handle packing, shipping, and even returns in a scalable and flexible way that works with the ebb and flow in your seasonal business cycle.
Large Business Benefits from Outsourcing Logistics
For large businesses, the benefits of 3PL service have never been clearer to see than they are today. Warehousing, transportation, and human resources all carry substantial costs with them, and 3PL providers offer greater efficiency, reliability, and flexibility to meet the varying needs of large businesses. Providing a consistent customer experience through all stages of distribution, including final mile delivery, has never been more important, and choosing the right partners can make a big difference.
While the reasons for choosing to outsource some or all of your logistics and distribution processes may vary from those of other businesses, it is clear that the benefits are substantial and that they can have a serious impact on the success of your business as it grows and evolves. However, just as there are many reasons to choose a 3PL service provider to help your business on its path, there are also many things to look for in a trusted 3PL partner.
The team at SCI is comprised of experienced professionals with the knowledge and expertise it takes to help your business make smart decisions for your logistics needs and help you achieve your short-term and long-term goals.
Contact us today to speak with one of our logistics experts and get started with a free consultation on how we can work together for the future success of your business.