Choosing a 3PL provider is not an easy task, and rightfully so. The choice should be made based on data, strategy, and relationship.
It is also difficult to tell facts from fiction in the golden era of information that we live in. Therefore, today’s article will breathe through some of the biggest 3PL (third-party logistics) myths so you can make more confident decisions.
Myth #1: 3PLs are costly
This myth may have come from the negative reputation of some outsourcing companies. It is also understandable that organizations think they would have to spend more than usual when a middleman is involved.
However, that is not the case at all. If anything, 3PLs save you money in the long run. They do so by utilizing the “economies of scale”. Third party logistics’ bulk purchases are charged lower prices. The overall cost then is spread over the large goods.
Due to 3PL’s large volume and carrier network, the majority of third-party logistics companies offer you better costs. To determine the optimum pricing, they make use of their volume and lower backhaul rates. In the long term, lower shipping costs will save your company a ton of money and are frequently the greatest way to balance off other per-order expenses.
Moreover, you are saving other types of costs used to build and maintain an in-house team.
Myth #2: 3PLs take away control over services
This possibly is one of the most common fears when it comes to seeking 3PLs. It is true that the high demands of smooth logistics put a lot of stress on human resources and the business itself. Therefore, preventing errors is a difficult task and the operation is prone to spin out of control.
However, with the help of 3PLs, you no longer need to worry about such a possibility. As a matter of fact, 3PLs allow businesses to gain more control over the core business operations, and focus more on value-driven relationships instead of spending too much money on maintaining an in-house team. 3PL providers often have a software package that comes with it, allowing you to keep track of the data and how the processes are going.
Myth #3: 3PLs worsen your customer service
Customer service is important and should be prioritized. Letting a separate partner completely taking over a part of your business logistics requires a lot of trust, especially when it comes to handling problems with your customers. However, do keep in mind that your 3PL partner’s reputation also depends on the results they deliver. Another fact is that if you choose an experienced 3PL provider, they will know how to deal with demanding customers or when there are unpleasant surprises.
Therefore, the right 3PL provider for you understands your requirements and is experienced in the industry they are operating in. Customer service is the connection between your customers and your business. A good 3PL partner understands this and will work to keep up quality customer service.
Myth #4: 3PLs are only for large companies
This assumption is simply not true. Services that 3PLs offer are beneficial for companies of all sizes and industries. It does not matter how big or small a business is, every organization needs to prioritize smooth order fulfillment along with quality customer experience. This means having a proper order fulfillment process in place. If you spend too much time and resource on figuring out how to handle the logistics operations smoothly, the cost may go up unexpectedly. As mentioned earlier, 3PLs offer you a cost benefit by utilizing the “economies of scale” principle, which allows you to enjoy lower prices thanks to bulk purchases.
Letting 3PLs – those who have extensive experience and a wide network to handle your logistics operations – assures that the quality and expected consistency is met while still staying within budget.
Myth #5: 3PLs do not care about your company’s culture
It is difficult to say for sure that every 3PL provider takes time and energy to better understand you and your businesses. However, 3PLs that understand how beneficial aligning business styles will work and ask questions to better understand your work cultures and values. Then, the relationship will only grow stronger once you and your 3PL partner understand one another’s expectations, goals, and demands.
All in all, this myth is not necessarily true. As long as you and your 3PL work on communicating in the relationship, the following processes will flow smoothly.
Myth #6: Intermodal shipping saves money
3PLs intermodal shipping does save you money, but it does not necessarily save you the most money at all times. Intermodal freight is more on the costly side. Eventually, the final cost is made up of the modes of transportation used and the number of times the freight exchanges hands.
Myth #7: 3PLs might not have enough capacity to meet your demands
While it might be true that your 3PL does not have trucks lining up outside and waiting to spick up and ship your order immediately, 3PLs have access to an expensive network of connections. These connections are experts in their field and have the ability to carry out your demands even during times of sudden orders surge.
Not only does the 3PL have the capacity to carry out your business demands, but it also gives you the freedom of scaling up your business without the burden of managing logistics operations.
Myth #8: 3PL warehouses simply refer to storage
Your business might be outsourcing 3PL warehouses to simply free up some space. However, 3PL warehouses offer a wide variety of other warehouse operations to help other operations flow smoothly, including:
- Picking and packing
- Inventory management
- Quality checks
- Update customers about the order
- Labeling, and so on.
Once again, do work on sorting out your demands first to choose your most fitting 3PL provider.
Myth #9: 3PLs may hinder growth
Despite the many myths surrounding 3PLs, this particular myth does not seem to have a plausible reason behind it.
Third party logistics services do not stunt growth. If anything, they help your business grow. As mentioned earlier in the previous sections of the article, 3PLs provide you with smooth logistics operations thanks to their large network of vendors. From there, you and your team will also enjoy the benefits that follow which include lower costs, more time to focus on strategic tasks, and scalability.
Myth #10: 3PL is only about picking, packing and shipping
3PLs are not simply about picking and packing. Each 3PL comes with a number of different services. To begin with, most 3PLs provide their users with software to keep track of the logistics operations, real-time updates, and meaningful reports generator.
Other than the basic picking, packing and shipping services, 3PLs also offer other services, namely:
- Inventory management
- Reverse logistics
- Customized packaging
- Shipping and distribution
- Fleet and route optimization
Myth #11: 3PLs only work with businesses that commit long-term
This last myth is partly true. There are 3PL providers that prefer to work with businesses that commit to their service for at least one year.
Nonetheless, there are also more flexible providers. They are happy to sign short-term contracts or have no problem working with you during a particular season, or on a month-to-month basis. Again, no 3PLs are the same, so make sure you understand your provider’s preferred relationship commitment.
While the golden era of information provides its users with a wealth of information, it can sometimes be difficult to tell facts from fiction. A successful partnership will add value to your business’ logistics operation, which might even boost growth significantly.If you are looking for a credible 3PL partner to grow with you, let SCS Solutions team be a part of that journey. Contact us via our website https://www.scssolutions.io/, Linkedin, or Facebook.