Managing a supply chain in-house takes a lot of work. You need the staff, the warehouse space, and the technology to pull it off. And these are just the tip of the resource iceberg, whether your company delivers domestically or internationally.
Most business owners want to save as much time and as many resources as possible, especially as a company gets its bearings. Since logistics can take up quite a few assets and labor hours, outsourcing logistics or supply chain operations can provide many benefits. Reduced costs and increased shipping capacities are only some of them. You can take the services of logistics outsourcing companies.
6 Reasons to Outsource Logistics Services
Let’s look at the top six reasons why you should prefer outsourcing logistics service providers.
1. Gain Enhanced Expertise
Chances are, managing supply chains is not your area of expertise. You could take the time to figure it out yourself, or you could eliminate the learning curve with an experienced partner. A third-party logistics, or 3PL, provider has years or even decades of industry experience behind their belt. They’ve also got warehouses, shipping supplies, employees, and technologies to make logistics a breeze.
When your business partners with a 3PL provider, you gain their expertise without having to assemble all those resources yourself. With an expert partner to handle your supply chain, you also don’t have to worry about negotiating with shipping carriers. A 3PL company already has carrier relationships, so your business can scale and optimize regional, national, or global supply chains.
2. Grow Market Reach
Businesses that operate online stores won’t usually limit their potential market reach to a single area. Unless your products and services require customers to live within a specific radius, you can expand into global markets. Research shows an average of 57% of online shoppers buy from retailers overseas. But getting products to those buyers will be a bit of a hurdle if you don’t have established supply chains.
A logistics partner skilled in managing global inventory and shipping can help online stores reach international customers. This way, you don’t miss out on market growth opportunities and chances to serve clients outside your area. You won’t face geographic limitations or boundaries as you discover viable markets in different regions or countries.
3. Get Access to Advanced Technology
Supply chains and logistics operations are already seeing the impacts of technology, but its potential is far from tapped out. About 60% of global organizations anticipate robotics and process automation will further impact supply chains by 2025. These businesses don’t anticipate the impacts will be minor, either. Big data and analytics, digital supply chains, and process standardizations are the trends researchers expect to have the most influence.
Smaller to midsized companies that can’t implement these technologies will find themselves behind the curve. Already, customers rely on and expect real-time notifications about where their deliveries are on the map. A 3PL provider knows which technologies are necessary to meet customer expectations and improve efficiency. They’ve invested in and deployed these resources, and your business will reap the benefits by working with them.
4. Transfer Risk
Sooner or later, nearly everyone experiences a problem with a package or delivery. It’s missing in transit, it arrives with damages, or it’s late. Porch pirates are also a well-known issue, especially near the holidays when deliveries and shipments increase. But besides these typical snags, there are also regulations to follow. These include international, domestic, and individual state laws governing transport and shipments.
Outsourcing your supply chain operations lets you transfer many of the risks that come with shipping products. It’s up to your logistics partner to take on the responsibility of complying with transport and delivery regulations. Plus, an outsourcer will handle the costs of lost and damaged shipments.
While your business might need to issue refunds for stolen or damaged products, you can usually recoup those expenses. For example, you could file carrier claims through your logistics vendor. Or your supply chain partner might reimburse you for those costs and handle the back-end claim process on your behalf.
5. Save Money
Putting together a sophisticated supply chain is expensive. A business needs to rent or buy warehouse facilities and fleet vehicles. Additional overhead includes employees, software applications, and computer and warehouse equipment. If your market reach is extensive or you have plans to grow, those overhead expenses will only increase. It’s not just a few warehouses you need, but multiple locations in strategic places.
Some businesses are large enough and have plenty of resources to do this. However, many don’t have the capital to create and maintain extensive supply chain networks. Outsourcing logistics to a third party streamline expenses and eliminates the need to build a complex supply chain. Vendors have those networks in place so you can focus your financial resources on growing your company.
6. Boost Customer Value
Companies that offer more convenient shipping and delivery options tend to stand out. Otherwise, online stores with subscription-based shipping arrangements, expedited deliveries, and simple pickup and return options wouldn’t grow into e-commerce giants. At the same time, offering all these options isn’t always feasible for smaller and growing businesses. You might not have the capacity, staff, finances, or carrier relationships to do it.
Fortunately, 3PL companies do. Outsourcing logistics operations means you can offer your customers more options. They’ll see increased value in ordering from your business if they don’t have to wait as long. Two-day, overnight, and same-day delivery choices make it easier for customers to buy from you. Easy return processes with carrier pickups from homes and work locations can also boost value. Customers won’t be as tempted to go to a competitor.
Outsourcing Logistics Lets You Play to Your Strengths
You’re in business to sell your products and delight customers with their benefits. Supply chain management is a critical part of your operations, but it’s likely not your core competency. It takes time, the right strategy, and money to get outsourced logistics right. Partnering with a 3PL provider removes the most common barriers to establishing effective supply chain networks. It will give your business the resources it needs to satisfy customers and create efficient operations.