Utilizing a 3PL provider has become a natural step in the development and growth of many retailers both big and small. With the benefit of increased storage flexibility, faster order fulfillments and invaluable expertise in the world of distribution, a logistics partner can steer retailers clear of potential disruptions and improve overall business efficiency.
As interest in 3PLs continues to grow, more businesses are left to determine when the time is right to outsource supply chain management. Here are five criteria to help you evaluate whether a reliable 3PL partner is the right move for your business.
1. You’re Running Out Of Warehouse Space
Scaling a retail business requires substantial physical storage space. Without it, orders can quickly become backlogged and delayed, resulting in unhappy customers and poor business reviews.
If your current warehouse space is limited, it may be time to consider outsourcing your warehousing and distribution needs to a 3PL with the technology and capacity to support your business’ growth. There are many benefits to using a 3PL for warehousing and distribution, including:
- Lower overhead costs
- Greater ability to adapt to changing market demand
- Access to sophisticated inventory management software (often with detailed reporting capabilities that can help you make strategic business decisions)
- Use of an existing network of reliable shippers to deliver products
- Having a partner with years of expertise and experience in the shipping industry
2. You’re Struggling to Keep Up with Inventory Management
Though steadily improving, the global supply chain has yet to fully return to its pre-pandemic state. In a recent survey of supply chain executives, more than half of respondents said they expect supply chain disruptions to continue into early 2024. To compensate for this uncertainty, more retailers are attempting to build up their inventories – despite the increased cost associated with storing excess product and potential for rapid shifts in consumer demand.
Retail brands struggling to manage their inventory and stay a step ahead of evolving customer needs can benefit greatly from what a good 3PL partner has to offer.
3PLs optimize inventory management by providing access to an efficient, widespread network of warehouses and trusted distributors. Within these established storage facilities, advanced inventory management software can automate many of the manual processes involved, helping partners fill orders with increased speed and precision. Using in-house analytics, 3PLs can also identify optimal locations and seasons for storing products so retailers can fill orders more efficiently and at a lower cost.
3. You’re Ready to Grow Your Business
With a full network of resources already in place and access to the industry’s best technology and automation, a good 3PL can help retailers quickly adapt to changing demand. That means they can scale with your business without breaking a sweat – an especially useful skill in today’s uncertain economy.
Whether your retail business is seeing exponential growth or a need to scale back operations for a short period, a third-party logistics partner can shoulder the majority of your operational burdens and allow business owners to focus on things that directly promote further growth like developing new marketing strategies, building relationships with current customers and improving product design.
4. You’re Moving a Lot and Moving Fast
Maybe you’re already experiencing rapid growth and suddenly find yourself needing to move a lot of inventory as quickly as possible. This is a good sign it may be time to employ a 3PL to help you keep pace – and keep your customers happy with quick deliveries.
One of the biggest draws to using a 3PL is the valuable industry expertise a good partner brings to the table. 3PL providers have been packing, shipping and managing supply chain disruptions for decades, and can thus advise you on the most efficient shipping methods (plus any potential hazards) that may be associated with moving high volumes of your product.
5. You’re Trying to Cut Shipping Costs
In areas like order fulfillment where time is money, 3PL providers use a combination of sophisticated management software, trusted carrier networks and in-house resources to reduce the time between purchase and delivery. They also can use their extensive network of shippers to secure the best rates, which means more efficient shipping costs for retail partners.
Facilitating supply chain management in a cost-effective manner is a 3PL’s primary function. Retailers of all sizes benefit from logistics partners that take on the many (many) moving parts involved in shipping and order fulfillment, allowing growing brands to focus more intently on the core components of their business.