3 Reasons More Companies Outsource to 3PLs

Supply chain management is a science. You’re not a scientist. That’s one of the reasons more business owners like your outsource to 3PLs more than they did a decade ago.

To be fair, maybe you are a scientist. But more to the point, you are a supply chain manager, whether you realize it or not. Any entrepreneur that takes a product from its rawest form and puts it in the hands of a customer is the proud owner of a supply chain.

But supply chain management isn’t your expertise. Your product is.

Third Party Logistics companies have that expertise. And recent reports show that more and more companies outsource to 3PLs, not just to eliminate the overhead of owning more warehouses than they can afford, but to take advantage of their logistics innovation and knowledge, as well.

3PL Spending Grows Faster Than Inflation

More companies outsourcing to 3PLs every year.

As Supply Chain Digest reports, citing a study by a Penn State logistics expert, 58% of shippers report an increase in services they outsource to 3PLs in 2017.  Granted, 26% of shippers reported they were bringing some logistics activities back into their operations.

But the overall picture over the last decade is one of outsourced logistics growing faster than inflation. After all, spending on 3PLs has risen 4% on average every year since 2007 in North America, and 4.8% globally, well above average inflation.

Supply Chain Dive in a related article framed the growing 3PL-shipper relationship as driven by the need for “innovative thinking in the supply chain”.

These articles focus on large corporations with in-house supply chain expertise. Nevertheless, the fundamental advantage for all companies to outsource to 3PLs is pretty easy to understand.

  1. They Need More Cost-Effective Supply Chains
    Once upon a time, businesses had little choice but to make some investment in warehouses, delivery fleets, or other logistics processes that added to a company’s overhead. This is not necessarily the case today. When you outsource to 3PLs, you bring down your capital expenses. 3PLs also have the efficiency to improve fulfillment targets and maintain customer satisfaction.
  2. They Need Expertise
    3PLs evolved in a highly competitive market where the most efficient, knowledgeable and reliable players survive. Consequently, when you contract with a 3PL, you are more than likely working with a company that has been optimized to its market. Beyond outsourced warehouse management, 3PLs can provide supply chain consulting and services for importing, exporting, trucking, and other logistics issues.
  3. They Need to Scale3PL providers have the resources to adjust and improve supply chain management, the technology investment to service your logistics needs, and often the scale to accommodate your needs as your company grows.

It’s easier than ever to manage your inventory with 3PL partners using a system that integrates with more than 50 3PLs worldwide (and counting).

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