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There are many advantages to using a third-party logistics provider (third-party logistics service, or 3PL) for your business. These advantages include reduced cost, efficient transport, and lower environmental impact.
Using a 3PL to manage your shipping needs is a good way to lower your business costs and protect the environment. In fact, enlisting the services of a third-party logistics provider can benefit an enterprise of any size, since it offers expertise in specific areas and enables a highly streamlined supply chain.
Let’s take a look at some of these advantages in more detail.
Benefits of Using 3PL in Supply Chain Management
Reverse Logistics Reduces Wasteful Shipping Materials
Today, many companies have embraced the idea of recycling in their reverse logistics processes to help their customers reduce the number of materials they use in shipping. These companies are not only reusing their components as much as possible, but they also encourage recycling and reuse of materials.
Many businesses are committed to creating a better world and reducing their environmental footprint. For example, Image Microsystems Inc. repurposes scrapped computers and other products to create virtual stores that fulfill orders from refurbished inventory. This method also cuts down on the carbon footprint of the retailer by reducing the amount of transportation costs and wasteful shipping materials.
The process of reverse logistics involves receiving returned goods and sorting them by their disposition. Those products that can be repaired or used are sent to a repair facility, whereas those that cannot be repaired are sent to a recycling area instead. This process also reduces costs and waste by making products more sustainable for the environment. Ultimately, 3PL reverse logistics services help reduce wasteful shipping materials, increase the overall flow of goods, and minimize the overall impact of logistics transportation.
Reverse logistics is becoming a key part of the supply chain and has existed for over 100 years. It began when Montgomery Ward and Sears Roebuck began shipping goods by rail. E-commerce, in particular, has accelerated the growth of reverse logistics as consumers demand no-hassle return policies. As a result, return values for e-commerce buying have grown three to four times higher than they were for brick and mortar purchases.
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Reduces Supply Chain Costs
Using a 3PL is one of the best ways to control and reduce supply chain costs for retailers. It is a fast, efficient method for transporting goods from one location to another, and it can streamline the various operations in a supply chain.
In addition to minimizing transportation costs, 3PLs can improve inventory management by optimizing mixed loads. They can also minimize the risk of damage or loss of inventory. These services can increase supply chain efficiency by coordinating manufacturer production cycles with end-user demand, and they can use fuel-efficient vehicles to maximize their mileage.
Third-party logistics companies can improve the visibility of inbound freight by providing transparency to suppliers and retailers. Doing so helps these businesses to schedule receipts, plan labor, and alert buyers to available inventory, while also enabling them to control the routing and carriers and reduce their inbound freight costs.
By eliminating these headaches, companies can focus on improving the quality of their product delivery, which will in turn improve the environmental impact of the delivery process. A third-party logistics company can provide visibility of inbound freight and can offer recommendations for improvements to packaging and storage efficiency.
The third-party logistics provider can help companies manage costs through a flexible model. For example, 3PLs can help reduce labor costs by minimizing the use of expensive modes of transportation. Likewise, you may want to expedite the shipment if your customer needs the delivery of a certain order sooner. Using a 3PL to manage the shipping process for you can help you stay within your budget and avoid costly mistakes. It is also possible to develop dynamic hot pick zones for items that sell fast.
Third-party logistics service providers can streamline warehouse operations for e-commerce companies. Since they operate multiple warehouses, they can handle customer orders more efficiently than individual warehouse owners and companies, thus, saving them both time and money. A 3PL not only helps to cut down supply chain costs, but it can also be a great option for businesses looking to grow.
Reduces Environmental Impact
A 3PL can significantly reduce the environmental impact of its services by introducing several environmental-friendly practices. Companies can reduce the amount of packaging they use by choosing environmentally-friendly materials, and can also opt to use more non-polluting fuels.
For example, a 3PL can optimize its inventory storage practices by co-loading products from different clients and ensuring that their vehicles use efficient fuel. This will ultimately reduce the carbon footprint of a 3PL, which contributes to global warming.
Sustainability has become a growing trend, and many 3PLs are incorporating green logistics transport practices into their operations. These efforts are a reflection of growing environmental awareness and consumer demand for responsible supply chain practices. Hence, a 3PL that invests in sustainable practices positions itself as a strong competitor in the market. The green movement has spurred the adoption of eco-friendly practices throughout the supply chain, a trend that has now become a competitive advantage.
Sustainable business operations are much in demand in the current economy as more and more customers want to do business with companies that do their part to preserve the environment. Moreover, governmental regulations are pushing industries to adopt more environmentally-friendly processes.
Considering this trend, many businesses are looking for 3PLs that have implemented eco-friendly initiatives in turn. These practices may include reducing the carbon footprint of transportation, optimizing waste output, and using recyclable or sustainable packaging. The use of renewable or solar energy can also reduce the 3PL’s overall carbon footprint.
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A 3PL should also strive to make its warehouse as paperless as possible. This can be achieved by implementing a paperless warehouse management system which will significantly reduce in-warehouse paper usage and waste. Furthermore, a 3PL should ensure that its employees are trained to follow proper recycling procedures.
A 3PL can also minimize the company’s carbon footprint by combining shipments and reducing trips. These initiatives can also result in lower costs, better service levels, and a reduced impact on the environment.
Lowers Business Costs
The use of 3PLs to manage the supply chain processes of a company is a great way to improve efficiency. It allows a company to plan for spikes in order volume in advance, cut down on overtime costs, and ensure timely delivery of goods, thus, minimizing the environmental impact of the delivery process. It also helps the company plan where to store goods and how to configure pick faces, making it easier to optimize order fulfillment efficiency and lower business costs per order shipped.
When a 3PL handles all your warehousing, you can save on overhead costs, such as labor, rent, and equipment. Your 3PL partner is a dedicated logistics provider, constantly improving its processes to minimize costs and maximize supply chain efficiencies.
Some of the more advanced shipping practices include kitting, product bundling, and assembly. Kitting combines related items into one ready-to-ship item, eliminating the need to weigh and package each individual piece. Assembly also allows you to print labels in advance, making fulfillment faster and more cost-effective.
While there are costs associated with hiring a 3PL company, the overall benefit of working with one is worth the price. In most cases, the lower business costs combined with the increased value further improve the supply chain performance. Many 3PLs are able to fulfill orders in a way that leaves you free to focus on your core competencies.
A 3PL also helps you to automate supply chain operations. By identifying gaps and outlining a new strategy, a 3PL enables you to cut down unncessary costs by eliminating waste operations.
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The Bottom Line
A third-party logistics provider will make the entire supply chain process easier and faster by reducing your costs and automating order fulfillment and tracking. By taking advantage of a 3PL’s fast implementation time, you will also benefit from better customer service. These factors make it a good choice for a company that wants to increase customer satisfaction and lower its environmental footprint at the same time.
At Logos Logistics, our logistics experts manage your full supply chain, including order fulfillment, warehousing, transportation, and delivery. For more information on how to optimize your supply chain with third-party logistics, contact our customer service today.
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