Are 3PLs Cost-Effective?

A successful 3PL partnership breeds efficiency. Whether you’re looking to maximize scaling opportunities or pare down business expenses as budgets grow slim, a good third-party logistics expert dramatically improves supply chain flexibility – the foundation of any cost-effective logistics operation.

Trusting logistics professionals to handle your shipping, storage and fulfillment services can streamline nearly every aspect of your day-to-day operations. Here’s how:

How Can a 3PL Help My Business?

Logistics partners are an efficient option for outsourcing the fulfillment arm of your business. With the aid of a 3PL, brands can spend more time marketing and developing products and less time negotiating shipping or warehousing contracts – which is a big reason 90% of Fortune 500 companies partner with logistics specialists.

While every logistics partnership is different, most every 3PL performs three main functions: picking, packing and shipping orders. Asset-based 3PLs bring their own warehousing facilities, fleets, tracking tech and shipping networks to the table to further serve these functions and skip the headache of negotiating rates and services with smaller regional partners across the country.

Utilizing Shared Warehousing Space

Access to cost-efficient warehouse space is one of the biggest advantages to using an asset-based 3PL. These in-house facilities provide safe, well-maintained storage space for businesses looking to expand without sinking funds into warehousing themselves.

Choosing shared warehousing with a 3PL means being able to grow (or shrink) your paid storage space as demand ebbs and flows, without paying for any unused excess. Businesses predicting large fluctuations due to seasonal trends can also increase warehouse space for a few months at a time without worrying about a long-term contract.

When shopping for a 3PL, consider the following:

• What type of inventory are you storing? If you need environmentally controlled facilities, be sure to ask about temperature-controlled space beforehand.
• Do you need multiple warehouse locations? You want your product to be as close to your customers as possible to cut down on shipping costs. Be sure to find out where your potential 3PL’s warehouses are located.
• Consider the holiday boom—can they provide easy expansion? Find out just how flexible your prospective 3PL can be when it comes to warehouse storage. Can they offer you more space when you need it? Can you decrease space when things are slow?
• What kind of technology do they use in their warehouse? The benefits of up-to-date warehouse management systems are huge, especially when it comes to reducing costs (see below).

Turning to a 3PL for your warehousing needs can ease the stress of product management and give your business opportunities for growth without unnecessary costs.

Benefits of Integrated TMS and WMS

Logistics technology is a significant investment for any individual business. Through a 3PL partnership, companies reap the benefits of advanced transportation and warehouse management systems (TMS and WMS) without any in-house heavy lifting. TMS and WMS track and catalog shipments in real time, providing valuable insight into supply chain strengths and potential weak points.

These tools also carry the following benefits:

• Reduce missed sales. WMS can help safeguard against insufficient inventory, ensuring you don’t miss a sale. Every year, stockouts cost retailers around $1 trillion.
• Locate important inventory. A good inventory management system increases your inventory accuracy, helps employees easily locate specific items and identify whether an item is out of stock.
• Lower warehouse costs. With the right technology, you’ll know how much space you need for your inventory every year. WMS will show you which products have the highest and lowest sales volume, seasonal trends and other key info to keep your warehouse costs to a minimum.
• Improve operational efficiency. Advanced TMS and WMS tools eliminate siloed systems and processes. Customers can easily streamline bid requests, quickly initiate tracking updates and retrieve digital shipping documents for a faster reconciliation process.

Integrating the technology already employed by 3PLs into your business’ fulfillment services is a cost-effective way to pick, pack, and ship.

Find Your 3PL Partner Today

A 3PL can diversify your supply chain, grant access to crucial industry technology and store products more efficiently while leaving your business plenty of room to scale. Learn more about how First Call’s warehousing facilities and industry-leading tech tools can help your business reach its full potential by contacting one of our experts.