What is Third Party Logistics?
Are you prepared to handle your own shipping as your business grows? Many companies find themselves unready to navigate the complexities of logistics as their shipping needs increase.To face the challenges of selling across oceans (or even state lines) effectively, standard practice is to employ a single source third party logistics (3PL) company to outsource management of everything including over-the-road freight, shipping and port drayage.
The three primary types of 3PL firms are asset based, management based, and integrated. Asset-based firms uses their own trucks and equipment; management-based firms focus on coordinating with equipment and warehouse owners on behalf of their customers. Integrated providers, on the other hand, own some equipment, and use management techniques to supplement what they own as necessary.
Some companies are hired only to take over a specific portion of the supply chain, such as storage. This can be effective, but it can risk breakdowns in the supply chain as goods move between carriers, and tracking down issues can be difficult as multiple customer service contacts become involved. A single source logistics company can simplify business by making one company responsible for a products’ entire journey from the factory to the customer.
For anyone looking to expand sales over a larger geographic area, or increase their product volume, a 3PL is a necessary step in growing a business. By working with a reliable single source logistics 3PL firm, a company can focus all its energy on creating excellent product, rather than the challenges of getting that product into the world.
Choosing a 3PL firm
For those looking for a shipping company in Savannah GA, there are some excellent options. The main points to consider are reliability, cost structure and compatibility.
Reliability and expertise are the most difficult to gauge in a business partnership. Look for firms that give clear answers for requests for quotations or requests for information. Check out approval ratings, and see if you can find recommendations from within your network.
3PL companies have a variety of cost structures for their services. The most common 3PL cost structures are fixed cost, activity-based cost or hybrid plans. With a fixed cost arrangement, expectations are clear, but the plan may not reflect real-world fluctuations. For activity-based plans, the billing will reflect business accurately, but over time this can lead to contention over who’s getting an advantage. In a hybrid plan, billing blends fixed cost and activity-based cost structures to counterbalance the downsides of each method.
Compatibility is easier to explore. A 3PL firm should handle both their current volume, and projections for growth. Additionally, the 3PL firm needs to be able to efficiently deliver within the intended distribution range within the company’s budget. It’s also necessary to know that a provider has a compatible technological platform. Lastly, it’s vital for a company and 3PL firm to have commensurate levels of service. When looking for a single-source provider, this is less of a consideration, but it’s still important to clarify your company’s needs, and negotiate clearly with your 3PL distributor.
What are the advantages of outsourcing to a single source 3PL agency?
Using a 3PL firm streamlines your business by taking more off your plate. Put simply, this outsourcing can lead to savings in warehouse management and staffing, as well as increasing distribution range. By letting experts handle your transportation goals, you can focus on excellence in your core business.