Outsourcing logistics management to third-party logistics (3PL) companies is more common than some shippers might think. 80% of Fortune 500 companies and 96% of Fortune 100 companies use 3PLs. But, what does it mean to outsource logistics? When a company uses a third party to help with various supply chain functions, they are outsourcing logistics. Outsourced logistics services considerably impact business performance, and many companies see the benefits of managed transportation services, transportation management software, and outsourced logistics.
Frequent logistics outsourcing activities
Managing all logistics operations can be difficult, especially if you operate a large company with a complex supply chain. Many businesses think they will save money by running an in-house logistics department, but in some cases, it can harm businesses and become expensive. While you may doubt whether outsourcing will benefit you, assigning outsourced transportation management to a 3PL is common for companies small and large. A 3PL can provide services including:
- Inventory management
- Materials procurement
- Freight audit
- Shipment tracking
- And even more solutions
What are the benefits of logistic outsourcing?
1. Cost Savings
3PL providers simplify logistics processes and ensure your supply chain remains consistent, solid, and unified. An excellent third-party logistics provider will have a vast network of qualified carriers with whom they have built relationships over the years. A 3PL’s carrier network ensures you will get lower rates and faster transit times. The more comprehensive the network, the more carriers are available to bid on to give you peace of mind that your shipment will always be covered.
A 3PL will help you negotiate lower GRIs (general rate increases) and fuel surcharges. They can create cost-saving opportunities for companies running in-house shipping departments in most cases.
2. Capacity and Flexibility
A 3PL is familiar with complex regulations and can handle fluctuating shipment schedules. A 3PL can handle regularly scheduled shipments across all modes and lanes, plus any expedited shipments. Shippers also benefit from increased load consolidation, frequent backhauls, and optimized routing and distribution.
A dedicated team of logistics experts monitors, analyzes, and optimizes transportation processes every day. They can also negotiate lower fuel surcharges and find better ways to optimize your shipments. A 3PL will ensure that transportation operations never fall victim to the constantly changing supply chain environment.
3. Risk Management
Outsourcing the risks of transportation operations to a logistics services provider protects your organization from penalties and fines. They understand and comply with state and federal DOT regulations. Also, if a shipment is lost, stolen, or damaged, it is the 3PLs responsibility. Ultimately, a 3PL helps prevent these types of incidents.
If your business is growing and you are trying to scale your existing logistics team to accommodate for growth, you might spend more than you plan to. Achieving economies of scale is riskless with a 3PL partner since their focus is on logistics services. Scaling up or down at times of need is also possible with this partnership.
4. Technology Advantages
A reputable 3PL utilizes robust tech tools such as a transportation management system (TMS), tracking tools, and more. At PLS, we built an in-house TMS to give you better visibility into all aspects of your shipment from origin to destination. When managing all the transportation processes on your own, you would spend a big part of your budget on a TMS.
A 3PL grants you access to logistics management and reporting all in one system. A 3PL will integrate a transportation management system to give you visibility on shipment statuses, cost summaries, average lead times, and average haul length vs. cost per pound reports. Centralized technology allows decisions based on real-time and historical data analysis.
5. Operational Control
Through a 3PL partnership, your operational control will increase. However, outsourcing is a two-way street. Integrated systems and technology let 3PLs provide full load and freight management visibility. You will get regular reporting and analysis to keep track of your transportation management. You, the client, remain fully in control.
6. Save Time by Outsourcing with a 3PL
Ultimately, working with a 3PL can benefit your budget and operational efficiency. Outsourcing transportation management saves businesses time and money. Third-party logistics companies provide expertise to add value to your supply chain processes, giving you time to focus on what matters most – your products, business, and customers.
If you are experiencing rapid growth, need more flexibility, have increasing logistics costs, or want to focus more on your core business initiatives, PLS Logistics might be a great fit for you. Learn more about our Outsourced Transportation Management services or contact us to make PLS Logistics Services your preferred 3PL.