The carriers and shippers are constantly making efforts to find ways of enhancing their operations and improving productivity. This is where 3PLs emerge, transforming logistics by optimizing operations for both parties involved. According to recent studies, companies utilizing 3PL services were able to cut their supply chain costs by an average of 10% to 15%.
But how does the role of a 3PL logistics company skyrocket the efficiency and smoothen the logistics process for both carriers and shippers? Before we find out, let’s first understand what 3PL company is.
What is 3PL Logistics Company?
Third-party logistics, or 3PL company, offer logistics and supply chain management services to businesses. These suppliers deal in various activities such as warehousing, transportation, and distribution. The carrier and shipper free up their resources for the core activities by outsourcing their logistics operations to a 3PL company. Hence, improving overall efficiency.
How Does 3PL Improve Efficiency for Carriers and Shippers?
This logistical world has become very competitive, and staying ahead is the only way to survive. 3PL logistics providers help businesses stay ahead of their competitors. Let’s discover how 3PL services providers can help improve efficiency for carriers and shippers:
1. Optimize Transportation
Transportation is the core of logistics, and 3PL services providers excel in this. According to research by Armstrong & Associates, 3PLs handle more than 80% of all U.S. logistics transportation.
With the assistance of advanced technology and large networks, 3PLs can reduce shipping costs by optimizing routes to the most efficient degree. The primary benefit of 3PL services is an increase in freight opportunities.
With this service, the carriers can fill more loads and decrease the number of empty miles. This is possible because 3PL uses routing software to match carriers with shippers who need transport along similar routes. This results in maximum utilization of vehicles and enhancement of transportation efficiency.
2. Improvement in Warehouse Management
3PL effectively contributes a great deal to logistics operations. According to a report compiled by WERC, 65% of warehouses face space constraints issues. Companies that offer 3PL logistics try to solve this issue by offering scalable warehousing solutions that deploy advanced technologies such as AS/RS and inventory management software.
Thus, they can offer faster turnarounds with fewer errors. Because of this, effective warehousing for the shippers means quicker fulfillment with a lesser risk of stockouts, resulting in compelling performance in the supply chain.
3. Seamless Inventory Management
Accurate inventory management allows for operational efficiency. In this case, the former leads to high storage costs, while fewer stocks cause less sales and profits. 3PL uses a sophisticated system to optimize inventory.
As per a survey conducted back in 2022 68% of shippers were able to improve inventory accuracy with the use of third-party logistics. With 3pl professional’s help real-time visibility can be achieved. Hence, carriers and shippers would find it easy to track their inventory level and make timely adjustments to the same.
This strategized accuracy avoids expensive imbalances in the inventory and makes the product available for shipping whenever needed.
4. Utilize Technology Efficiently
Technology is evolving in every sector; the logistics sector is no exception. Starting from TMS to WMS, the 3PL providers are using very advanced tools to keep up with the changing times. They use predictive analytics to forecast demand and optimize supply chains accordingly.
According to Deloitte, 53% of the companies using predictive analytics have enjoyed tremendous gains in supply chain efficiency. This helps the carrier and the shipper to anticipate possible problems better and proactively adjust to the difficulties for improved logistics performance.
5. Cost Savings
The significant advantage of using a 3PL service is decreasing labor, technology, and infrastructure costs for carriers and shippers. Companies outsourcing their logistics operations to third-party logistics providers managed to cut their logistics costs at a remarkable pace. This is done by negotiating better rates from carriers and suppliers and then giving them to the shippers so they will have cost-efficient logistics operations.
6. Adaptation to Market Changes
Logistics is one of the most dynamic industries, and with new regulations, the ups and downs of the market, and emerging technologies, the scope for changes is limitless. However, in this respect, the role of the 3PL logistics company bears much significance. They are knowledgeable regarding trends and regulations in the industry and help the carrier and shipper maintain compliance and competitiveness.
7. Offer Increased Flexibility
Logistics require flexibility, especially during peak seasons or a sudden rise in demand. Third-party logistics services can scale up or down depending on changing needs. During peak seasons, such as holidays, the shippers depend on third-party logistics providers, and high volumes need to be handled without any investment in long-term infrastructure. This way, at least the carriers and shippers can manage such fluctuation without much hassle and there is no clogging up of the flow of goods.
Conclusion
Third-party logistics bring efficiency to the operation of both the carriers and the shippers. From optimizing transportation to better warehousing on high-tech levels, the role of a 3PL logistics company has become pivotal in cost reduction and smoothing of operations.
Working with a 3PL partner will bring significant logistics efficiency with its associated advantages, including enhanced customer service, cost savings, and flexibility. If you haven’t taken benefits associated with third-party logistics services yet, now is the perfect time to put them to work for you and breed success within an ultra-competitive marketplace. So, contact a reliable third-party logistics services` provider and improve the efficiency of your logistics operations.