Partnering with a 3PL for warehousing, distribution and transportation can provide benefits for companies of all sizes. We have highlighted many of them such as efficiency, security and location; make sure you check them out if you haven’t already! One of the most important benefits to a 3PL partnership, however, is the impact that a quality relationship can have on finances and the bottom line of any company.
Here are our top 10 bottom line benefits of partnering with a quality 3PL:
Flexibility
Working with a 3PL allows a company to be flexible with numerous resources within their supply chain. Everything from warehouse space to transportation volumes are scalable to fit product demand. Flexibility on geography allows you to be nimble and move into new markets as needs arise. Shipping options such as demand or just-in-time allow manufacturers to be flexible with their space because raw materials and finished goods are stored off site and brought in only when they are needed. Overall a 3PL gives a business options that can come in handy during the ebbs and flows of each year!
Variable costs
Variable costs refer to paying for assets only when they are used, verses when they are acquired. Whether costs are for warehouse space, logistics equipment or labor, charges only occur when one of these services is used. For example, paying by the number of pallets in a warehouse or with a price per square foot is variable while paying for a whole warehouse, no matter how full it is a fixed cost. Having variable costs can be extremely valuable for many businesses. Without having fixed costs such as a mortgage on warehouse space, equipment or salaries, companies can focus spending on what will help business the most! This means that companies have the ability to grow, down-size or move on without issues within their company or for their customers.
No hiring or training
Hiring and training employees is a huge task for Human Resources departments. Working with a 3PL helps companies refrain from having to hire and train their employees to handle storage, distribution and transportation.
No buying assets or capital investments
In a 3PL partnership the warehouse, equipment and employees are already in place, meaning that capital investments are minimal! Specialized investments tend to be minimal and can be spread out over the life of a contract. Investments can be built into rate structures or paid for separately, depending on both parties preferences.
Up and running quickly, conveniently and efficiently
To keep the cash flow going for companies, 3PLs work hard to keep business running smoothly even in times of transition. For example, a new client at Murphy had racking and all of the equipment needed to operate at peak efficiency set up in our warehouse in advance. Since they do not ship to their customers on the weekends, they are having inventory moved into Murphy’s warehouse on a Saturday so that it can be set up over the weekend and ready to ship out on Monday morning! With no down time, their customers won’t even know that they changed warehouses!
Efficiency
Improving efficiency is an easy way to impact the bottom line of any business. Because logistics is a 3PLs core competency, supply chains run efficiently and effectively when outsourced to a 3PL. Key performance indicators (KPI) are regularly tracked to ensure that accounts are running at peak efficiency at all times. Check out our previous blog posts on how 3PLs regularly save their clients time and money by improving efficiency.
Bundling Services
Working with a 3PL provides access to specialized services in all areas of the supply chain. Asset-Based teams own resources and employ teams to handle work. Brokerage 3PLs work as a middle-man and outsource the work to asset-based outfits. See our post on “Asset-Based vs Brokerage Transportation teams (warehousing and distribution works in the same manner). Regardless of which type of 3PL, having multiple services outsourced such as warehousing, distribution and transportation can bring on discounts and help the bottom line!
Certifications
From ISO Quality, to SQF Food certifications, making sure that products and employees are safe should be a top priority. Becoming compliant and educated on best practices takes resources, time and a lot of money. Quality 3PLs already have these certifications, saving their partners thousands of dollars, annually!
Real estate experts
We are real estate experts, with a mixture of owned and leased buildings 3PLs can be creative and flexible with resources to maximize space, capacity and return on investment for clients. At Murphy, our clients have access to 15 warehouses in the Twin Cities, MN and four in Kansas City, MO.
Expansion
Working with a 3PL helps companies easily expand and move into markets throughout the world! Whether you already have a partner with multiple locations, or are looking to expand into a new market and find new partners – a 3PL can make the transition and expansion more efficient, less expensive and less stressful on your company. Be sure to follow our blog next week for updates on expanding your business with a 3PL.
Have a wonderful day!