Like most other entrepreneurs, you start a company to grow it to a giant. And once your company has grown to some extent, you may need to review your logistics process. This way, you can enhance your operations to sustain business growth. With the increasing popularity of outsourcing, many manufacturers are considering the benefits of using a 3PL warehouse service to help manage inventory.
That said, you can build a warehouse and either hire a team of permanent employees or outsource logistics tasks to a third-party logistics firm (3PL). However, there are many benefits to outsourcing the function rather than working with a full team of internal employees.
But before diving into the advantages, it’d be a good idea first to get an overview of 3PL warehouse outsourcing.
An Overview Of 3PL Warehouse Outsourcing
3PL warehouse outsourcing is the practice of hiring a third-party company to assist you with your logistics process. The company hired will be responsible for storing and distributing goods and services. In simple terms, they’ll be responsible for managing the logistics aspect of your business.
You might think that 3PL warehouse outsourcing is a recent invention in the business world, but this isn’t the case. The first 3PL companies were established in the 1970s, though they were only utilized by a few businesses. Today, among all businesses, 96% outsource logistics. You should also follow suit to grow your own business.
Benefits Of Using 3PL Warehouse
There are several benefits to using a 3PL warehouse in your business. They include the following:
1. Helps Save Money
One of the most effective ways to ensure your company’s continued growth is by saving money or reducing costs. That’s true, since minimizing costs helps maximize profits. Therefore, you need to find practical ways to save money in your operations.
Using a 3PL warehouse can help you save money in various ways. For instance, it eliminates the need to employ a full team of workers in your warehouse department. A few will be enough to complement the outsourced company.
Employing a full team of permanent workers will cost you a lot of money in monthly salaries. You can avoid that by using a 3PL warehouse since you only need to pay the hired company a service fee—meaning you’ll pay them just for the services they render.
Moreover, because of the high competition in the 3PL warehouse sector, most service providers charge very low fees to attract more customers. Therefore, partnering with one can help you save a lot of dollars in the long run.
Besides, 3PL companies have already established good relationships within the industry. They can have greater influence when it comes to negotiations and can ensure you get the best deals in the logistics sector.
2. Enables You To Focus On Other Aspects
Logistics is a crucial factor in the success of your business. However, focusing solely on it means other areas of your company will likely suffer.
The outsourced company will take full charge of managing your company warehouse or logistics in general. This enables you to focus on the core aspects of your operations, such as improving your products or services.
3. Provides Scalable Solutions
You might be just starting out, so it may seem fitting to build a small warehouse infrastructure that only serves your current customer base. However, you might encounter many problems when your business starts to grow. For instance, you’ll be forced to spend a lot of money to expand your warehouse. But you can avoid that by using 3PL service providers.
Most 3PL firms offer scalable solutions. They’ll allow you to use their distribution resources depending on your current needs. Therefore, you can always upscale your operations when your business is in high demand. And when sales are down, you won’t have unutilized resources in your company, and you don’t have to downsize manpower.
4. Improves Customer Experience And Satisfaction
The primary purpose of using a 3PL firm is to ensure goods and services reach customers without delays. When you deliver goods on time, it helps enhance customer experience and ensure satisfaction. Earning customers’ trust as a reliable company helps you increase your retention rate to make more sales.
5. Enables Market Expansion
For your business to grow, you must strive to reach new markets. You can achieve that by hiring a 3PL company. It’ll give you access to markets where you haven’t established a presence yet. As such, more people will come to know about your products or services, thus increasing your brand’s visibility.
Takeaway
Partnering with a 3PL company is one of the most effective approaches to growing your business. It helps you to save money, centralize your focus on important matters, adopt scalable solutions, reach new markets, and enhance customer experience. However, it’s crucial to find the most suitable 3PL service provider in the industry for your business to reap these benefits.
