This is part one in a two-part series. You can read part two here.
Considering how many small- to medium-sized businesses like to tackle as much as they can headlong, certain results of a recent survey conducted jointly by Ryder System, Inc and Inc. Magazine raised a number of eyebrows in the business world.
Not only do we now know that 3rd party logistics (3PL) companies are growing at a rate of about 25 percent annually, generating more than $70 billion, more than 60 percent of the businesses questioned by the survey were using one to help with their logistics.
Why Is Everybody Outsourcing 3PL?
More than half of the companies in the survey were outsourcing their logistics—it shouldn’t be a surprise considering what a 3PL can do for businesses of any size.
Not only do you get instant access to experts with decades of experience in shipping, there are other basic benefits that every company who partners with a 3PL can take advantage of right away, like:
- Warehousing and fulfillment scalability. When your company’s just starting out, you probably don’t need a lot of space to store your inventory, and the same would apply if you’re trying a new line or are considering expanding in a new direction.If you hit it big, though, you’re going to need a lot of space—and fast! 3rd party logistics companies are flexible and scaleable, allowing you to use their storage facilities as you need them instead of being trapped in the physical footprint of a building you’ve invested in as an owner or a renter.
- Disseminated distribution warehouses. Many 3PLs can give you the illusion of speed, even if it takes a day or two to get your orders fulfilled in their entirety. This happens because they have well-placed warehouses spread across your target market.
- Shipping cost reductions. Even if your 3PL doesn’t run its own shipping fleet, you can realize substantial discounts on shipping costs because they buy so much space in bulk from major carriers like UPS, USPS and FedEx. Bulk packaging, negotiated shipping rates and reduced labor to get the packages to the loading docks can make a huge difference to your bottom line.
- Improved customer happiness. Today’s business understands that one of the biggest indicators of growth is customer satisfaction, along with customer engagement. If your deliveries are behind or your order fulfillment’s consistently slow, sloppy or inaccurate, that customer relationship is going to suffer badly.Instead of putting your customer at risk, turn them over to pros who’ll deliver on time, keep them updated on their package’s progress and even walk them through making returns if necessary. Dedicated reverse logistics units can be a real game changer.
Outsourcing your fulfillment services isn’t just what the cool businesses are doing right now, it’s what the smart ones are doing, too. In part two of this two part series, we’ll look at what a 3PL can do for you that may be a bit more difficult than sending a package across the country really, really fast.