Dupré Logistics


Five Ways the Right 3PL Can Have a Positive Impact on Your Revenue

Thursday, October 16, 2014

More and more, businesses are turning to third-party logistic providers (3PLs) to outsource their supply chain. In 2013, for example, 86% of Domestic Fortune 500 companies used 3PLs for logistics and supply chain functions.

On the surface, the benefits for businesses using 3PLs are obvious: good 3PLs bring their expertise to the table, while the businesses save time and money. Outsourcing logistics leaves businesses free to focus on their core competencies.

Unfortunately, a poorly chosen 3PL can wreak havoc with your logistics and fulfillment processes, and ultimately lead to lost sales and customer attrition.

There are other benefits that are not so obvious. In this blog post, we’ll discuss the five ways that the right 3PL can positively affect your revenues.

Benefit #1:Expertise and Experience

Not every company can be great at every aspect of its business. In fact, many companies find that outsourcing different aspects (logistics, in particular) makes more sense than keeping them in-house.

A good 3PL will bring both expertise and experience in managing a wide range of logistic processes to your outsourcing needs.

A 3PL that has been in business for many years has the experience in managing shipments, tracking freight bills, and collecting receivables for businesses similar to yours.

Years of experience give a good 3PL expertise. Your 3PL should be able to act not only as an outsourcer but a trusted advisor, suggesting optimizations to your supply chain and providing you with timely feedback on any bottlenecks or capacity issues.

Benefit #2:Flexibility and Scalability

When you keep logistics in-house, you have to constantly balance your needs for transportation, labor, and space. Misjudge your need for any one of the three, and you could end up with a costly bottleneck, or resources that lay unused.

Outsourcing your logistics to a 3PL means outsourcing those concerns. A good 3PL has the flexibility and scalability to call upon the resources you need, when you need them. If you have a great year, the 3PL can add more trucks, employees, and warehouse space. Similarly, if you have an off year, the 3PL can scale back its operations to suit your needs exactly.

You don’t have to worry about hiring or firing employees, finding new warehouse space, or leasing vehicles. The 3PL can scale your logistics operations up or down seamlessly.

Benefit #3:Analysis and Planning Capability

Logistics is complicated, even for experienced 3PLs. A good 3PL will be able to properly analyze your business requirements and plan the appropriate logistical processes to move your company’s goods through the various stages of the supply chain.

Ensuring that everything arrives when and where it’s supposed to is far trickier than it appears on the surface. And it’s not only the flow of goods that’s critical.

An expert 3PL will ensure that the flow of goods through the supply chain is matched by the flow of information – so that you get actionable metrics that can tighten your supply chain and keep it running efficiently (also see Benefit #5).

Benefit #4:Access to Resource Networks

The best 3PLs have access to networks that can provide resources your business can’t always access. They should be well connected to a number of large networks that give them access to other carriers, equipment, labor, and other resources.

In some cases, 3PLs can find resources that would not normally be available to your business because of economies of scale. For example, a 3PL may be able to negotiate a better price because of volume discounts. Similarly, a good 3PL can leverage its pre-existing relationships with suppliers to source resources your business simply can’t obtain.

Benefit #5:Measurable Results

Logistics is more than a process; it’s also a cycle. By measuring KPIs (key performance indicators), a good 3PL can find bottlenecks and eliminate them. This is part of a continuous feedback loop: every loop through the cycle gives the 3PL more information about what works, and allows it to fine-tune your logistic processes even further.

In fact, it’s quite common for this metric analysis to reduce the cost of logistics. A 2012 study found that 15% of shippers reduce their logistics costs by outsourcing to 3PLs.

The quality of the 3PL you choose will have a direct impact on the success of your logistical outsourcing. As a result, your chosen 3PL will also impact your revenue and customer satisfaction. Choosing a 3PL is a critical decision.

The proper combination of expertise, experience, flexibility, and continuous measurement and improvement takes your 3PL from being a contractor towards being a full partner in your business.

© Dupré Logistics  Privacy Policy