If you delve into the workings of any of the world’s most successful companies, you never find that they do their own logistics. Instead, they rely on third-party providers – people with the specialist skills that they need to ensure that goods arrive at their destination on time.
What’s interesting, however, is that some businesses still have an idea in their heads that they can do logistics themselves. Fresh entrepreneurs often believe that they can save time and money operating transport and distribution themselves – something that is rarely true, if ever.
The main reason for using third-parties is because they offer a more reliable and cheaper service than doing the same thing in-house. Companies pay a monthly fee to a carrier (or intermediate, like a broker), and then, in return, they meet all their transport needs.
Better Scaling
Entrepreneurs tend to find that their logistical nightmares emerge from a lack of appreciation of scale. In the early days, eCommerce companies tend to get a few dozen orders per week. At this level, the founder can manage most of the logistics and distribution themselves, or rely on international shipping using UPS.
Over time, however, the needs of the enterprise grow. Eventually, the founder finds themselves doing nothing but packing and shipping items, with no time left over to think strategically about business direction.
Worse still, customers begin making complaints. The packages they’re getting aren’t the ones that they ordered, creating a logistical nightmare.
Third-party logistics companies offer a solution. With them, you don’t have to worry about any of the practicalities yourself. Most quality 3PL providers will do the whole lot for you, including boxing up items and fulfillment.
The benefits of these services to rapidly growing companies are genuinely profound. Third-party operators often provide a scalable service that you can tap into as demand for your products and services goes up. They also offer tremendous resources, no matter how large your enterprise ultimately winds up getting.
Less Administration
The second significant benefit is fewer administrative duties.
Working out which products are in your inventory, which are making their way from suppliers, and which are going out to customers can be a nightmare for your staff. Without a quality system in place, you risk overwhelming your team, leading to a breakdown in your business model.
The same is not valid, however, of tried-and-tested logistics providers. These companies have robust systems in place that allow them to process a high volume of orders in a short space of time. Their systems are designed to handle thousands of requests per day, with prices that scale roughly one-to-one with usage.
Assistance With Cross-Border Shipping
Finally, as your company grows, you’ll have more and more customers clamoring for you to expand your operations overseas. Here again, third-party providers can help. Traditionally, getting products across borders is a challenge, but these firms deal with all the paperwork on your behalf, making your life a heck of a lot easier.
In conclusion, therefore, relying on 3PL is the smart thing to do. Don’t attempt in-house measures – they don’t work.
