You may have just started a new business or grown into a larger enterprise. No matter what the case is, you might have to look for a third-party logistics provider. But before you get in touch with anybody, you must know the nitty-gritty of 3PL and their trade. Let’s discuss it here.
What is 3PL?
If you are wondering what 3PL is, then essentially, they provide logistics services to aid certain or all aspects of a company’s shipping operations. More often than not, 3PL service providers are blended into an organization’s warehousing and transportation processes. Thanks to their ability to customize and scale their services that they can help organizations meet specific needs while maintaining a seamless supply chain.
Given how complex supply chain logistics are, a 3PL service provider can streamline processes and bring considerable expertise and knowledge to the table. They can help you save money and time by eliminating the need to invest in technology, warehouse space, staff, and transportation. Their resources and skills become particularly useful when shipping internationally, thereby helping you go global.
The 3PL myths you should let go
By now, you may have a clear idea of what 3PL is and how it can benefit you. But sadly, there are a lot of misconceptions about third-party logistics that hold organizations from hiring this service. Let’s debunk six common ones here:
Myth #1: “My company is just starting. I don’t think it’s big enough for a 3PL.”
This is what most novice entrepreneurs think about hiring third-party logistics. But the reality is you need a 3PL. Yes, not every online store requires it, but every business needs to have a proper order fulfillment mechanism in place. There has to be a fair degree of consistency in the volume of orders to meet your account maintenance charges. In fact, the break-even point is quite low; if you ship 50 or more orders per month, that’s when you break even. Also, shipping orders can be a nightmare sometimes. So, a 3PL can help you with that and allow you to focus on scaling your business.
Myth #2: Third-party logistics are extremely pricey investments
Well, that’s not the case at all. There is certainly a fee element involved in the cost of hiring a 3PL, but it shouldn’t prove as expensive as you think if your service provider can negotiate the shipping rate per order. Most third-party logistics providers give you better rates owing to their extensive volume and carrier base. They leverage discounted backhaul rates and their volume to settle on the best price. Lower shipping rates will lead to enormous savings for your business in the long run and is often the best way to offset other per-order charges. Not to forget, you also save a lot of money by not having to hire in-house teams and maintaining storage space. So, it’s one of the most cost-effective services you can hire for your business.
Myth #3: Hiring a 3PL means giving up control
This is perhaps the biggest fear of organizations that hold them back from hiring third-party logistics. The concern is valid, but not in the case of these services. The hired company will maintain your inventory and take care of end-to-end processes involved in order fulfillment. However, it certainly does not mean you are relinquishing control of your business to them. In reality, hiring third-party logistics gives you better control over core aspects of your business by eliminating all the nerve-wrecking, time-consuming aspects of logistics. At the same time, 3PL service providers come with a software package that allows you to keep a tab on all processes.
Myth #4: A 3PL service provider lacks a stable capacity
It’s true that a third-party logistics service provider does not have a truck waiting right outside to pick up your orders. So, one may think that it’s hard for a 3PL to offer a stable load capacity for the freight you pay. The contrary holds true. These service providers maintain a strong network of carriers who provide the necessary transportation services. They have constant access to this base and find the most qualified carrier to pick up your order. As such, they can deliver stable capacity even in times of a crunch.
Myth #5: Third-party logistics degrades the quality of customer service
Honestly, this ultimately depends on the company you hire. If you hire a bad one, obviously your customer service will suffer. Ideally, you should vet the 3PL service provider in advance to ensure they provide excellent customer support throughout the order fulfillment process. It’s recommended that you check out online reviews and call up the company directly to know more about them. A good company can also ship your orders faster—something that promises consistent quality. So, a third-party logistics provider that does the job right will always elevate the experiences of your customers, not erode them.
Myth #6: A 3PL service provider fails to understand your business
The fear that the third-party logistics company will not understand the culture and needs of your company can stop you from hiring one. Don’t let that happen. Again, it boils down to your choice. Reputed 3PL companies make sure that they listen to you very carefully. They make all attempts to understand your business and your logistical needs and come up with the best solutions. So, make sure you are smart about who you outsource this function to, and how you communicate your needs and philosophy.
Additionally, here are 6 E-Commerce Challenges 3PL Can Help You Tackle.