With increasing pressure to reduce costs, understand new regulations, and deliver products faster, there’s no doubt there are a lot of issues shippers have to deal with in the management and execution of today’s supply chain. Today’s shippers need relief as well as flexibility more than ever. And many are now asking themselves, “To outsource or not to outsource; that is the question.”
A big part of the reason more shippers are considering outsourcing may be that today’s 3PL relationship is changing. It is becoming less transactional and seen more as a partnership or extension of the company. What used to be regarded as a third-party outsider can now potentially be an integral part of an organization’s supply chain strategy. Smart shippers are realizing that 3PLs can provide strategic oversight that not only delivers cost reductions and more efficient processes but also becomes a relationship vital to their long-term strategy.
So why outsource? What benefits could be realized? Here are 3 benefits to think about.
1) Cost reductions – You may want to investigate further if you ever wonder about the real cost advantages to outsourcing your logistics activities. According to the recent 2015 Capgemini 2015 third-party logistics study, the average fixed logistics cost reduction reported by shippers who use a 3PL was 15%.
3PLs are becoming more proactive in finding ways to help shippers reduce costs. If companies can reduce their assets, they can turn fixed costs into variable costs which leads to a reduction of capital used. 3PLs can often realize economies of scale that allow them to execute logistics operations at lower costs than the shipper could realize.
2) Focus on core responsibilities – Let’s face it. We can’t do it all as much as we would like to think we can and how much is your time worth? Outsourcing to a 3PL releases functions that are not part of your core responsibilities. Shippers can tap into 3PLs to increase their workforce as needed, especially given today’s ongoing talent-gap issues found in the supply chain industry. If you’re productive with your outsourcing, it should simplify your workload and contribute to faster execution of tasks.
3) Improved service levels – With today’s increased demands from customers, this is a key focus and concern for many companies. Retaining the services of a 3PL can lead to improved service levels or quality simply due to the fact that they have the experience, equipment, and know-how. If you have challenges with the speed of delivery, accuracy of orders, flow of real-time information to customers, or number of product touch points, an experienced 3PL may be able to help you develop a better strategy.
So maybe it’s time to look at your relationship with your 3PL as more than a transactional, short-term solution and focus on the long-term benefits it can provide. What additional benefits have you experienced with your 3PL? Let us know what you think in the comment box below.
Resources used in this blog:
Capgemini Consulting, 2015 Third-Party Logistics Study
About the author: Mark London is VP, Sales & Marketing at G&D Integrated