A 3PL can be a valuable asset to the companies that utilize them as they add value and expertise to the supply chain. They take the hassle out of logistics through the optimization of supply chains and on-time deliveries at a lower cost to the companies. Using 3PL logistics companies offers many benefits to businesses and companies.
5 Benefits of Using a 3PL:
Logistics firms offer lower transportation rates and can help reduce return goods cost and lost sales. 3PL logistics companies have buying power due to the volume of freight they deal with and usually offer reduced rates from the carriers. In the long run, it will allow you to save costs and reduce inefficient spending.
3PLs 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.
Create continuous optimization
3PLs 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 to a logistics firm.
3PLs 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.
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.
When companies choose to work with a 3PL provider, they fully reap these benefits as the 3PL truly becomes an extension of their team.
Environmentally-friendly business processes are good for the bottom line and the ecosystem. While most companies have stepped up to keep customers educated on their green initiatives, many have yet to expand those efforts throughout the supply chain. Using a 3PL for supply chain management can be very beneficial to companies.
The state of sustainable transportation
More than 3,700 companies participate in the Carbon Disclosure Project (CDP), an independent global system for companies to measure, disclose, manage and share climate and water information and sustainable initiatives. According to a recent CDP report, 43% of respondents say they have achieved year-on-year emissions reductions, but only 28% of their suppliers can say the same.
Why use 3PL for supply chain management sustainability?
Transportation and logistics companies now focus on sustainability more than ever. A gas-guzzling, emission-heavy industry like transportation is being held responsible for its environmental impact. 3PLs are responding to the need for sustainability by assisting companies in incorporating green initiatives into their everyday processes.
The U.S. Environmental Protection Agency (EPA) estimates that as much as 75% of all emissions come from logistics processes. Transportation plays a large role in this figure. When it comes to applying a green supply chain, benefits are seen not only in the environment but in operations too.
How does a 3PL help boost sustainability?
Through visibility derived from TMS data. With access to advanced reports, shippers are able to see where the most environmentally-harmful processes are located within the supply chain.
Here are 3 ways a 3PL uses visibility to drive sustainability in your supply chain:
Technology Integration A 3PL integrates technology with emissions measurement and management processes to track emissions throughout all transportation functions. Shippers receive sustainability reports that include fuel efficiency and/or emission rates.
Data-Driven Performance Optimization When a 3PL has access to your transportation data, they can produce better results in sustainability. For example, if a 3PL has mode and route data, they can consolidate shipments or employ intermodal services to improve overall efficiency while reducing emissions.
Maintaining Compliance A 3PL monitors environmental performance to ensure improvement, but also to ensure compliance. Rules on emissions change based on locations and are becoming stricter. 3PL technology gives shippers insight on differing requirements and makes sure you’re in compliance before a shipment leaves the warehouse.
3PLs are most effective at implementing sustainability initiatives when working on a long-term contract with a shipper. This is because long-term success can be prioritized over short-term profit.
More companies are evaluating their supply chain operations and costs and assessing alternative production options. Paul Polman, Unilever’s CEO pointed out, “Sustainable growth will be the only acceptable model of growth in the future.”
There are several benefits to your business when outsourcing the supply chain. As it will reduce costs, improve service and allow the shipper to focus on core competency. Third-party logistics firms give you a chance to provide value through solutions, service, and expansion. There are two categories of 3PLs: asset-based and non-asset based 3PL.
The main difference between the two is that asset-based firms own part of the supply chain, like trucks, distribution centers and/or warehouses. On the other side, a non-asset based 3PL, predictably, does not own supply chain assets.
Owns many or all assets in the supply chain
Can take care of the entire supply chain
Align your solution within their strategy
Knowledge and expertise to identify and evaluate challenges and solutions
Negotiate for cost savings
Flexible, work with the large carrier network
Uncover hidden freight costs
There are many misconceptions about non-asset based third party logistics companies in the transportation industry. This is understandable because before 2013, just about anybody with access to the internet and phone could claim themselves as a non-asset based 3PL. That is until DOT changed the freight broker surety bond to $75,000. Today, a good 3PL will be a transparent, collaborative logistics partner that saves money and drives value for a shipper.
There are pros and cons to both types of 3PLs. Likely, the goal of both is to reduce errors, cut costs and improve general initiatives. However, asset-based firms could encounter a conflict of interest, because they’re managing your logistics using their assets. But a non-asset 3PL doesn’t have any hidden agenda. Since non-asset based firms act as the third party in every aspect, they can’t use their own assets as an advantage.
Some key benefits to outsourcing transportation to a non-asset based 3PL include:
Competitive carrier rates and secured capacity
Knowledge on base rates, surcharges and other fees
Continuous optimization for business improvements
Collaboration and partnership to build long-term results
PLS Logistics is a non-asset based 3PL. PLS lets you focus on your job’s responsibilities while your single point of contact runs your supply chain. Also, PLS doesn’t have an inventory of assets to keep profitable; our team connects to a large carrier network to eliminate inefficiency and provide value at a low cost. Also, we are experts at negotiating and can provide documentation of proven successes. We’re proud to offer transparent, trustworthy services to shippers.
Outsourcing logistics processes to third-party logistics companiesis more common than some shippers might think.
Third-party logistics companies offer a suite of services, including supply chain management. Efficient transportation is a competitive advantage in today’s marketplace, so many companies now focus on optimizing logistics functions.
6 reasons to outsource transportation to third-party logistics companies:
Save Time and Money
Third-party logistics companies have expertise, transportation management software, carrier network, and reporting capabilities, so they assure time and cost savings for the shipper.
3PLs leverage industry relationships and shipment volumes to get lower prices. They can negotiate lower fuel surcharges, too. Also, third-party logistics companies have thousands of carriers in their fleet network, so carriers bid on freight which lowers the price significantly.
A 3PL will continuously search for ways to cut costs and add value to your logistics operations. Also, there’s a dedicated team of experts monitoring, analyzing and optimizing processes every day. A 3PL will make sure that transportation operations never fall victim to the constantly changing supply chain environment.
Outsourcing the risks of transportation operations to the logistics provider is protecting your organization from penalties and fines. Also, if a shipment is lost, stolen or damaged, it’s the 3PLs responsibility. Anyway, a 3PL lowers these incidents.
A 3PL with a TMS is instrumental for insight into the supply chain. TMS technology provides the custom data you desire. TMS software is very expensive, so when a 3PL integrates the technology, you save money and get more accessibility to capacity. Shippers benefit from increased load consolidation, more frequent backhauls, and optimized routing and distribution.
Through a 3PL partnership, your operational control will increase. However, outsourcing is a two-way street. Presumably, reputable 3PL will collaborate and report to you regularly which creates visibility and real-time metrics into your transportation processes than ever before.
At the end of the day, outsourcing transportation management saves businesses time and money. Third-party logistics companies provide expertise to add value to your supply chain processes, so they give you time to focus on what matters most – your products, business, and customers.
3PLs and shippers work closely to form collaborative relationships, so they produce better customer experiences for the end-consumer. The relationship between shippers, suppliers, carriers and logistics experts is important, however, it’s complex. In a 3PL-shipper relationship, 3PLs deliver shippers a competitive advantage through integrated 3PL technology.
What is the 3PL technology?
3PLs use a transportation management system (TMS) to support supply chain procedures and transportation choices. Also, TMS software provides visibility into the shipper’s supply chain performance through data and reports. Moreover, TMS software enables real-time, tangible information that can be analyzed to identify problems and solutions within the supply chain. Creating solutions with insight gained from TMS data often results in better customer satisfaction.
Why does customer experience matter?
Improving customer satisfaction is the key to growth. What’s more, it is predicted that by 2020, customer experience will be more important than price, so the product or brand choice as a differentiator in purchasing decisions. Having insight into TMS-produced data might be the difference between a happy or unhappy customer.
Now, nearly half of Americans pay more attention to shipping as part of the overall shopping experience, compared to three years ago. On-time, quick deliveries are a necessity for positive customer experience. Undoubtfully failed or mistimed delivery will result in poor customer experience.
The data generated from a TMS allows shippers and their logistics provider to better plan for limited capacity, changing demand, fuel costs and/or shipment size. Also, with big data, more metrics are available to recognize customer expectations. Ultimately, the goal is to meet all expectations (from the shipper to the end-consumer). As well, TMS technology reveals the successes and failures of a supply chain.
TMS is a 3PL technology, which typically documents data for:
Status update notifications
On-time performance metrics
Shippers benefit from 3PLs who are able to generate and analyze this big data, so they find opportunities that drive success and improve the customer experience. According to an SDL survey and Econsultancy, as many as 80% of companies plan to increase their customer experience spending in 2015. Also, companies see more value and importance in delivering superior customer experience than ever before.
Trucking companies, 3PLs, and shippers face a huge challenge in creating great customer experiences due to customer demands and an increasing number of retail channels. To grow and achieve positive customer associations, companies should integrate transportation management technology to enhance its supply chain.
Third Party Logistics (3PL) companies started to spring up in the 1980s as a viable method of outsourcing logistics needs. 3PLs make it easy for large companies to get rid of various functions and assets. This is made in order to focus more heavily on their core business objectives. A 3PL can save your company millions of dollars and time, allowing you to dedicate more resources to your essential initiatives.
There are a few variations of 3PLs:
Asset-based firms use their own trucks, warehouse, and personnel to operate their business.
Non-Asset-based firms do not own their own trucks or warehouse space. They provide outsourced logistics solutions and freight brokerage services and have a large network of freight carriers that they partner with.
Financial-based firms provide freight payment and auditing, cost accounting and control, tools for monitoring, booking, tracking and tracing and manage inventory.
PLS Logistics Services, a non-asset based firm, is able to adapt to all clients’ needs because of our unique approach to the business that allows us access to thousands of transportation solutions across the country.
When it comes to selecting the right 3PL there are many factors to consider:
Do you have your own assets?
Can the 3PL meet your service requirements?
What is the 3PL’s track record? How do they rank nationally?
Does the 3PL work within your region?
How flexible are they? Do you require any special services they can’t supply?
Does their culture blend well with your company’s culture?
Do they have any reputable references? Have other branches of your company worked with them in the past?
You ultimately trust this company to represent you. You want to make sure they not only meet your required needs but that they are a good fit for your company as well. We recommend you take the time to research a few different 3PLs. That way, you can pick one that best suits your overall needs and goals, and not just best suits your budget. You want to find a 3PL that you can work with repeatedly and build a relationship with.
If you are new to logistics, you might ask this question multiple times a day. Or if you are a shipper, this might guide you in selecting the right Third Party Logistics Services company.
Ultimately, third-party logistics services encompass anything that involves management of the resources shipping to the destination areas. Additionally, in business 3PL has a broad meaning that can be applied to any service contract that involves storing or shipping things.
So What Is a Third Party Logistics Providers and What Do They Do?
A 3PL service may be a single service such as transportation or warehouse storage or it can be a system-wide bundle of services capable of managing multiple areas of your supply chain. To put it simply, 3rd party logistics is a company that works with shippers to manage their logistics operations.
This could include:
Transportation or freight management
Freight bill auditing
Freight rate negotiation
And much more
Of course, some 3PLS will specialize in certain industries – frozen food as an example. While others might specialize in one of the specific areas of logistics mentioned above. With so many 3PL options, narrow your search and be strategic to find a partner that provides reliable, affordable service and is truly vested in your company. Also, when companies choose to work with a 3PL provider, they fully reap these benefits as the 3PL truly becomes an extension of their team.
What is a 3PL provider (third-party logistics company)?
A third-party logistics provider, or 3PL provider, is an outsourced company that manages a particular part, or all parts of your logistics and transportation operations and executes transportation, freight management, warehousing, and other activities. In the simplest form, a 3PL company coordinates and manages functions for better transportation and supply chain efficiency. More than 65 percent of shippers are increasing their use of outsourced logistics services in recent times.
Why do businesses use third-party logistics providers (3PLs)?
3PL providers may manage a single part or a multitude of different supply chain processes within your company. Also, third-party logistics companies are capable of managing multiple areas of your supply chain. To put it simply, companies use third-party logistics providers to manage their logistics operations in a productive and cost-efficient manner.
3PL vs 4PL: What is the difference?
Both 3PLs and 4PLs are companies that help businesses manage their logistics functions, however, there is a difference between these two types of providers. Basically, 4PLs have extended functionality and mainly focus on overall, general management and execution functions, while 3PL providers are more inclined towards particular operation, transportation, and warehousing.
What are the benefits of using a 3PL provider?
Third-party logistics providers can save companies the time they would normally spend carrying out the management of their supply chain. Usually, 3PLs take over transportation operations and some managing functions, so the amount of manual job is greatly eliminated. Also, thanks to 3rd party logistics companies and their technology, you save time on automated paperwork, fewer organizational errors, and time spent on arranging shipments.
3PLs have the ability to make modifications to each connection in the supply chain when needed. The company benefits from the continuous improvements made to their logistics process when they outsource a logistics firm. Apparently, one of the main goals of using a 3PL is optimization. These companies analyze your supply chain and operation and can define gaps and inconsistencies, helping you to optimize processes. A 3rd party logistics company goes through every step of your supply chain to define the unnecessary operation and find the potential for cost savings.
3rd party logistics company has more buying power, extensive carrier networks and offer lower transportation rates. 3PLs also can help reduce the rate of returns, claims, shipping errors and lost sales. Through industry connections and thorough analysis, 3PLs can cut a substantial amount of costs you are spending on freight transportation and logistics. Thanks to relationships with carriers and experienced freight brokers, 3PLs can negotiate lower rates for you and ensure to eliminate unnecessary costs.
Regardless of the season, 3PLs give you access to the capacity and required equipment. Through their relationships with thousands of carriers, third-party logistics providers ensure to support your freight volume. Also, they give you the opportunity to optimize inventory and warehouse management.
3PLs have the expertise and thorough industry knowledge, and they can accurately forecast what will work 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.