Benefits of Third Party Logistics
Managing the supply chain is more complex than ever for businesses as online retail becomes increasingly central to their operation. Many turn to third party logistics (3PL) as a solution, using third-party businesses focused on distribution, warehousing and order fulfillment. This strategy has a fair share of benefits, especially for smaller businesses.
Lower Capital Requirements
A business that owns its own warehouse storage Los Angeles and handles transportation in-house has to dedicate additional capital to those facilities. Larger businesses may want to have that capital available elsewhere, and small businesses might find the notion entirely untenable. Outsourcing to a 3PL provider mitigates these costs.
As demand for products fluctuates, or as a business starts to expand into new markets, the distribution operations it uses may become insufficient. Alternatively, owning a large warehouse is cost ineffective with a lower inventory. 3PL services generally let clients pay only for the storage—or shipping, through practices like less-than-truckload freighting—they need. This allows a business to scale space and labor to their current inventory, useful during periods of growth, seasonal transitions and changing or fluctuating market trends.
By default, most businesses lack extensive expertise in logistics and supply chain management and are ill-equipped for such operations compared to their usual area of focus. However, 3PL providers operate entirely within these fields. Not only do they have the facilities for distribution and warehousing, they also employ experienced logistics professionals that are familiar with the common obstacles and pitfalls. When you use 3PL services, you also gain access to that experience, making it easier to manage the system and make it work for you.
Lower upfront costs, access to years of experience and the flexibility needed in a changing market are some of the advantages that third party logistics offers to businesses. For small businesses in particular, 3PL can help them achieve success and growth early on.