Why Do Companies Use Third Party Logistics Providers?

According to Bridgefield Group, a third-party logistics provider, or 3PL, “is an outsourced provider that manages all or a significant part of an organization’s logistics requirements and performs transportation, locating and sometimes product consolidation activities.”

In it’s simplest form, a 3PL firm coordinates and manages functions for a smooth transfer of output and production. Georgia Tech’s Supply Chain & Logistics Institute’s 15th Annual Third Party Logistics Study reported that 65 percent of shippers are increasing their use of outsourced logistics services.

Many companies are jumping on board, using 3PL firms to:

Save time

3PL’s save companies the time they would normally spend carrying out the management of their supply chain. Logistics firms also save them from costly mistakes that could take an ample amount of time to fix.

Create continuous optimization

3PL’s have the ability to make modifications to each connection in the supply chain when needed. Therefore, the company benefits from the continuous improvements made to their logistics process when they outsource a logistics firm.

Reduce costs

Logistics firms offer lower transportation rates and can help reduce return goods cost and lost sales.

Increase space and productivity

If the company is seasonal, 3PLs give them the opportunity to eliminate some of their warehousing space, transportation, and labor when needed. On the contrary, during the company’s peak months they are able to utilize more space.

Gain expertise

3PL’s are very industry-focused, and therefore they are extremely knowledgeable about what works best for their customers. They have technology that is able to produce advanced reporting and inventory management, tracking the entire logistics process.

When companies choose to work with a 3PL provider, they fully reap these benefits as the 3PL truly becomes an extension of their team.

To learn more and to see first-hand how a 3PL can help you manage your logistics, contact us today for a free Transportation Cost Analysis.