It’s essential to fulfill your promises to consumers and do everything to deliver goods on time. Now that we’re entering the post-COVID-19 era, consumers are used to purchasing more goods online and will continue to rely on convenience. That trend doesn’t look like it’s going to reverse course anytime soon.
Naturally, this paradigm shift is putting more emphasis on fulfillment. More and more companies are pivoting towards outsourcing fulfillment and using a third-party logistics firm (commonly abbreviated as 3PL) to handle all the distribution elements, from soup to nuts.
What Is Outsourced Fulfillment?
Outsourced fulfillment is a third-party vendor whose function is to handle the logistics and supply chain services. In nearly every instance, these services include receiving, storage, performing an inventory of your products, all of the fulfillment functions (including picking, packing, and shipping), as well as customer returns, also known as reverse logistics.
The Benefits of 3PL
There are several benefits to using a 3PL supplier. For one, you can save money. Putting the burden of leasing warehouse space and investing in the assets to handle this portion of your business (the warehouse management hardware and software, vehicles and employing, training, and managing employees in a non-revenue generating capacity) most likely isn’t a prudent use of your cashflow.
If your business has seasonal ebbs and flows, scaling up and down for these busy and slow times can be a strain on your bottom line. In short, a 3PL partner is in business full-time to handle this portion of your operation and is best suited to deal with the seasonal swings.
Industries That Can Benefit From Third-Party Logistics
1. Pharmaceutical and Healthcare
There are no more critical fields than medical and pharmaceutical when shipping and transporting on time. This is closer to a life and death scenario than virtually any other type of package goods. In this era of vaccines and test samples, speed and accuracy are required. In some cases, special accommodations need to be implemented, such as refrigerated shipments that maintain a specific temperature throughout the journey.
2. Food
Aside from the pharmaceutical and medical industries, companies in the food (and dairy) fields also have an important job – to get products from there where they’re homegrown to retail outlets and restaurants while maintaining the cargo’s integrity. Different types of food require different shipping, storage, and warehousing – and a 3PL company in business full-time has the tools and expertise to properly handle the task without delays, spoilage, or any other issues that plague supply chains.
3. Retail, Technology, and Consumer Goods
Retailers, particularly those with razor-thin margins, often need to order inventory on-demand, making timely delivery even more crucial for them. Many of these retailers haven’t fully recovered from the crush of COVID-19 and need to micromanage profit margins and shipping, warehousing, and inventory costs. Having a 3PL partner, one who is in business year-round to handle all aspects of the supply chain, will pay dividends and allow brands to focus their energy on customer satisfaction and other initiatives (like personalized marketing and improving their digital experience) that have become crucial for sales.
4. Home Improvement and Construction
In the aftermath of lockdowns and working-from-home, the home improvement industry flourished. In addition to the simple fact that people had more time to focus on home improvement projects, people moved out of cities and into surrounding suburbs, so the construction industry also saw huge gains. Naturally, in both instances, the need for obtaining the necessary materials is paramount for sticking to the timeline and budget, two of the most significant moving targets in the business. So, shipping and securing the materials required on time (both to retailers and professionals) is vital.
5. Manufacturing
Similar to retail, timing is everything in manufacturing. A late shipment of one key component can bring the entire process to a screeching halt, costing you both time and money. Having an experienced 3PL firm that can handle the logistics of multiple shipments from far-flung locations is a great asset and, of course, will keep the production line humming along.
In Closing
Virtually every business that ships products from Point A to Point B can reap the benefits of a 3PL partner. We’re not just another vendor stuck in the middle of you and your consumer, but rather a critical component of your overall business that can help streamline your operations. Breaking free of having to finance, manage and staff an entirely separate division of your business will have a lasting impact on your bottom line. It will allow you to focus on your core competencies, the things you excel at.
Chris Capelle is a technology expert, writer, and instructor. For over 25 years, he has worked in the publishing, advertising, and consumer products industries.
Sources:
Supply Chain Digital – Top 5 Benefits of Third Party Logistics
Industry Today – Employing 3PL Logistics
Grand View Research – Biopharmaceutical Third Party Logistics Market Size, Share & Trends Analysis Report By Supply Chain