A red semi truck driving on the highway delivering a shipment for a third-party logistics company.

A Beginner’s Guide to Third-Party Logistics: What You Need to Know

May 16, 2021

Whether your business is holding steady or growing fast, you know logistics can quickly become unmanageable. Many business owners find themselves mired by logistics when they would rather focus on innovating products and services. Outsourcing logistics to a third-party logistics (3PL) company can free you up to grow your business without getting bogged down.

If your company ships products, 3PLs are for you! They offer cost-effective ways to manage logistics for all kinds of products. Anyone from small direct-to-consumer e-commerce businesses to large business-to-business companies can benefit from third-party logistics companies. They can serve so many clients because they integrate warehousing and transportation procedures. This includes streamlining freight management to ensure an efficient supply chain.

What Services Do 3PLs Offer?

Third-party logistics offer a range of services that can improve your business’s supply chain management, especially if it is becoming too complex to manage in-house. 3PLs can coordinate the supply chain starting with warehousing and inventory management all the way through freight and transportation. By improving your logistics, they can ultimately improve your customers’ experience.

Third-party logistics offer value-added services that make them invaluable to businesses of any size. They provide more flexibility to companies in terms of the equipment and workers they have to respond to changing needs in the supply chain. Many companies struggle to find cost-effective ways to ship less than truckload or less than freight load. 3PLs are able to consolidate these shipments into trucks with other customers’ products to simplify everyone’s supply chain.

Through third-party logistics, companies gain access to many distribution channels and transportation methods, including intermodal transportation. Intermodal transportation uses shipping containers that can be integrated into different types of transport, which is especially useful if your shipment has a long way to go.

3PLs are also a good option for companies whose freight needs to be environmentally controlled. They have specialist vehicles that control factors, including temperature, humidity, and light, to best preserve products en route to their destination.

Some third-party logistics even offer reverse logistics. This allows customers to return items, and it can assist in the disposal of unwanted inventory.

Perhaps the most important value-added service that third-party logistics offer is expertise. Without a 3PL, each company must hire experts in every aspect of supply chain management. 3PLs already have that knowledge and can proactively anticipate problems in the supply chain. In other words, they can help you avoid expensive mistakes. They also have the flexibility to respond if something doesn’t go according to plan.

The Benefits of Using a 3PL Provider

Using a 3PL has many advantages compared to doing logistics in-house. Ultimately, most of those benefits save you time and money. By outsourcing supply chain management, you can focus your resources on marketing, product development, and other (more exciting) aspects of your business.

Third-party logistics save money because they have a ready-built infrastructure of warehouse space, technology, transportation, and labor to execute logistical processes. Businesses don’t have to invest in building and maintaining all of this themselves, making scaling operations up or down more manageable. For example, businesses using 3PLs don’t have to invest in fleets of specialized trucks.

If there is fluctuation in your business, third-party logistics have the flexibility to strategize accordingly without excess expense for you. A 3PL is able to respond to so many different customer needs because they have access to a transportation management system (TMS). This software allows 3PLs to consolidate loads and optimize routing and distribution in ways that are difficult and cost-prohibitive for many companies. This also means third-party logistics help carriers reduce “empty miles” amid high fuel prices.

What to Consider When Selecting a 3PL

There are many third-party logistics companies out there. How do you make sure you find the one that’s the right fit for your business?

First, ensure that you choose a 3PL with reliable capacity for your business’s volumes. Does it have a proven multimodal network that can keep up with your business? Remember to think long-term about this point. If you plan to scale up, you want a third-party logistics provider that can keep up with your growth rather than lose time looking for a new one at a critical time in your business.

Given the nature of logistics, it’s best to ask if a 3PL’s technologies are compatible with your business’s. It should be familiar with how your platforms will interact and anticipate any potential issues. This is especially important for managing inventory and customer experience.

Transparency is critical in supply chain management. A 3PL should be able to readily provide quotes. Ask how you will be able to track shipments, as some use apps.

One of the most important characteristics a third-party logistics provider should demonstrate is responsive support from logistics specialists. Ask your potential 3PL how it sets up points of contact to support your business. Digital platforms are invaluable, but ultimately, it’s important to know that there’s a person supporting you in managing your supply chain. Ideally, a company can provide references from clients who can speak to its past performance.

Outsourcing logistics to a third-party logistics company can save your business time and money. By streamlining the supply chain, they free you to focus on your core competencies while also improving your customers’ experience. Make sure you choose a 3PL with the capacity, reliability, and support that your business needs.

Are you interested in learning more about how a third-party logistics provider can help your business thrive? Reach out to First Call Logistics for a quote today!

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