Business conditions require companies to gain a competitive advantage. More companies choose to partner with a 3rd party logistics provider (3PL) to reduce the escalating cost of transportation and distribution and gain visibility. Companies of all size can benefit from outsourcing all or a portion of the logistic process to capitalize on 3PL services designed to improve their operations, customer satisfaction and profitability. Here are some considerations when evaluating the merits of choosing a third party logistic company:
Enhance cash flow Many companies have difficulty growing their businesses because of being hindered with cash flow issues and the need to concentrate on administrative obligations that keep them from really aligning, utilizing their business expertise and growing their businesses. Usually, small companies lack the resources to build staff and operate a facility, infrastructure and processes require for direct shipment to customers, handle returns, customer services or other services on their own. Partnering with a 3rd party logistics provider enables management to direct efforts towards core business, securing new customers and operations.Mid-size companies looking to expand can benefit from outsourcing to a 3PL for instant capacity and capabilities without the need to commit to more personnel and capital investment.
Manage ebbs and flows in demand Businesses that experience significant peaks in demand because of seasonality fluctuations, supply chain purchasing dynamics or spikes in sales can plan and manage the process most effectively by engaging 3PLs for a quick, pay-per-use solution to these spikes. Outsourcing allows businesses to use as much or as little of the providers’ resources as and when required.
Evaluate 3PL technology A critical part of any 3PL evaluation is the business technology. The logistics provider should have an integrated software system that allows management access to data necessary to make informed business decisions. The system should allow managers to track shipments, review item shipment history, indepth shipment detail, in transit locations, cost updates and potentially customer specific KPIs.
Assess knowledge and experience The 3PL vendor needs to have a thorough understanding of the client’s industry and customer base and unique business needs. The vendor should also have the capacity for planning, contingency plans and a broad range of logistics experience. The ideal vendor will use this knowledge and the dynamics of the client’s business to develop client specific solutions. An effective 3PL eliminates hassles with managing shipments, carrier negotiations, carrier safety reviews, auditing freight bills, tracking and quality assurance of shipments. In addition, your third party service provider should enhance overall operational efficiency—saving you time and expense while improving service.
Choose a 3PL vendor When sourcing for a third party logistic provider, check to ensure the company has the necessary structure and depth required to meet you current need as well as future requirements. The service provider should have seasoned professionals at all levels—executive, administrative and operations. Finally, 3rd party logistics provider also require the financial capability and willingness to support the company’s business logistical need. Make sure you check their safety record. Your primary mission is find a logistics provider that can help you grow the company, meet the needs of customers and enhance efficiency.
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