It's amazing what most consumers take for granted these days. Shoppers expect to find shelves stocked with merchandise from competing brand names each time they walk into a local store. They expect timely delivery of their goods when they shop online, and they expect to find those shipped goods in excellent condition upon arrival. In some cases, they even expect their products to be delivered to the store free of charge when it would cost more for home delivery.
What many of those shoppers don't fully understand is how much work is involved in getting those products onto store shelves and those packages from the manufacturer, then to a warehouse, and eventually to their doorsteps or their local store. You may understand what goes on behind the scenes a bit more because you have a product to sell and an interest in getting your products to those local stores or the doorsteps of your customers. One way of doing that efficiently and within your budget is to work with a third-party logistics company, otherwise known as a 3PL. These companies aren't all the same, but they do have one thing in common: they're goal is to help you manage the logistical side of your business successfully.
What are 3PL Companies?
Any business interested in shipping, storing, or moving goods can benefit from working with a third-party logistics company. The problem is sorting through thousands of companies that fall under this umbrella to find one reputable and well-equipped company that will cater to your specific needs. Some companies provide a full spectrum of services and can help their clients with all of their logistic needs while others focus on select services within the logistics field. Some will work with businesses of all sizes while others favor large corporations. Still others focus on companies within select industries or those shipping specific types of products. For instance, some logistics companies will only work with companies shipping frozen foods while others specialize in live goods.
Some of the services that a 3PL may offer include:
- Fulfillment services
- Returns management
- Transportation management
- Logistics software
- Freight rate negotiations
- Freight bill auditing and payment collections
- Inventory control
- Customs brokerage and clearance
- Freight forwarding
Current trends show that more than 78 percent of companies in Northern American and more than 94 percent of companies in Western Europe now use 3PL services. This is because most businesses want to leave their logistical operations in the hands of knowledgeable experts while they focus on aspects of their business in which they are the experts. If you have goods that you need to store and transport across the country or internationally, you are likely to benefit from connecting with at least one 3PL company as well.
Benefits of 3PL Warehouse Services
Online shopping is one of the fastest growing industries today. Everything from electronics to grocery is just a few clicks away. With several new online retailers coming up every month, e-commerce giants are also feeling the heat of such competition.
On the other hand, consumers are also becoming increasingly demanding. The consumer satisfaction ratio is going up. As a result, many online stores have started providing same-day delivery.
To ensure timely deliveries, e-commerce stores need to handle issues related to inventory, packaging, warehousing, shipping, and tracking carefully. Having a location near their core consumer base can help ensure speedy delivery. That’s where 3PL service providers come into the picture.
- Cost Reduction (Saving Time and Money)
Setting up a complete warehousing and shipping system from the ground up is a costly affair. Your business has to bear the burden of various costs including infrastructure, advanced technology, transportation, and employee compensation.
You will also need to invest a lot of time and energy into setting this up and running it every day. But, outsourcing this work to a pre-established 3PL organization will save your time and money.
Most third-party logistics companies also charge you based on your usage. If you have a warehouse of your own, you will be spending a lot of money on its maintenance and repair regardless of whether it is in full, partial or no use at all.
Similarly, you will also be paying for all your shipping, warehousing, and tracking technology and employees irrespective of their actual usage. So, hiring a 3PL service provider is the best way to save substantial money and time.
- Better Coverage
Setting up comprehensive inventory management and shipping system requires you to create a network of warehouses, couriers, and shipping centers across the globe, especially if you are going to serve a global clientele.
It is not only expensive but also time-consuming. A third-party logistics company, however, has access to a vast network of resources to meet your daily shipping and warehousing demands immediately.
A 3PL provider can quickly integrate your supply chain into the markets where your business doesn’t have an established presence. Thus, it offers better delivery coverage compared to your in-house warehousing system at a lower cost. You can grow your business without diverting your financial resources.
- Higher Consumer Satisfaction
A 3PL service provider can increase consumer satisfaction in two ways. It will allow you to focus on your core business activities and ensures efficient delivery. Many companies want to focus on what they do best which isn’t shipping and warehousing.
That’s why keeping your focus on in-house warehousing activities will undermine your abilities to deliver core services. For example, an online t-shirt printing business can focus on creating better and new t-shirt designs and strengthen product quality if it outsources the shipping to a third-party logistics company.
Plus, owing to their extensive resources and well-trained staff, a 3PL service provider ensures risk-free and timely delivery to your consumers. You can also get a host of value added services such as repacking, gift-wrapping, sub-assemblies, and just-in-time services to improve your consumer satisfaction considerably.
- Speedy Delivery
In the early days of e-commerce, consumers used to buy online to avoid standing in long queue at stores or driving to the nearest mall. It was all about shopping from the comfort of your coach. So, using snail mail or postal delivery services could work.
Today, however, customers need e-commerce retailers to provide same-day delivery or express delivery. But, a third-party logistics company can provide your business with speedy delivery.
They already have a well-established network of warehouses, advanced technology, and trained staff. They can keep track of a package from start to end and readily overcome international shipping issues. Plus, their credibility depends on delivering packages to the right place, at the right time, and in proper condition.
- Flexibility and Scalability
Many online businesses have to scale up and scale down their operations according to the market fluctuations. Your business will experience many busy and slow times during the year. For example, your orders will pick up during the holiday season.
Usually, a 3PL service provider will allow you to scale space, labor, and transportation according to your current inventory. Thus, you can rent out more warehouse space during the holiday season and less space during off seasons. They also offer freight or cargo consolidation.
- Scaling to Your Shipping Needs
As your company continues to grow, you need to have the proper space and equipment to deal with your expanding inventory. A 3PL provides this for you so you don’t have to invest your own money. However, it’s always important to thoroughly vet your 3PL first to assure they’re continuously scalable for your company.
When you need more shipping flexibility as well, 3PL’s can provide it without barriers. Almost all warehouses have locations in strategic places for decentralized distribution.
- Gaining Valuable Expertise
Along with the networking, you’re gaining valuable expertise using a 3PL. All outsourcing gives you experts who know what they’re doing so you gain a stronger competitive edge.
With business being more competitive than it ever has, you need a staff who understands the latest technologies and inventory management procedures.
- Improving Customer Service
Making your customers happy with efficient shipping is the heart and soul of keeping your business afloat long-term. Especially if you’re a startup, you don’t want shipping mistakes that set you off on the wrong foot. In today’s world, you need the fastest shipping procedures you can find to keep up with customer demands.
By keeping your logistics running optimally, your customers will deem you reliable rather than assuming improvement later. Most customers don’t give those second or third chances.
How Much Money Can I Save with a Third Party Warehouse?
Will using a Third Party Logistics Warehousing company save my business money? The answer is that it absolutely can. However, you must do two things in order to ensure that you’re getting the best prices and to ensure that you’re making a proper comparison. First, you must make sure that you look at all costs involved in doing it in house. Frequently, companies don’t think of all of the costs involved. For example, do members of your management team spend time on these functions? If so, you have to make sure you’re incorporating this into the equation. Second, you’ve got to make sure that you use the bidding process to your advantage. Making 3PL’s compete for your business enables you to be sure that you’re getting the best rates possible. That’s where we come in! We help connect you with multiple, competitive, FREE Quotes.
Is Third Party Warehousing More Cost Effective Than In House Warehousing?
A great number of product based businesses consider outsourcing with a third party warehousing company as a viable option for handling the warehousing and distribution of their product. But once they begin researching these third party providers, they oftentimes get hit with “sticker shock” in terms of storage and fulfillment fees. They often think to themselves, “Is it cost effective to outsource?” Or better yet, “Will cost savings be realized by outsourcing warehousing and fulfillment?” These are extremely important questions that need to be analyzed from a detailed financial perspective in order to gain appropriate insights to make the best decision.
Do You Know All of Your Third Party Warehousing Costs?
One of the most difficult aspects of any in house versus outsourcing financial analysis calculations is the gathering of ALL “in house” costs. If any of these costs are left out of the equation, you’ll surely not be able to gain the proper perspective in your decision. What kinds of costs need to be included?
- All salaries, benefits, insurance, and employee related expenses
- All management expenses related to storage and distribution
- All warehouse lease fees, including insurance
- All materials costs, including packaging materials, etc.
- All equipment costs, including ongoing maintenance costs and support equipment such as pallets, racking, computers, scanners, scales, etc.
- All customer service expenses for support with your customers and any related benefits, insurance, and employee related expenses
- Any software expenses related to inventory management and order management
Some of the most commonly overlooked areas are equipment purchases and adequate measures of management support related to the fulfillment process. Without a thorough analysis, you’ll potentially be left thinking that outsourcing isn’t the best option when in fact using a third party warehousing solution would be the best way to go.
The Added Benefits That Get Overlooked
In addition to forgetting to include certain in house costs, another common mistake is not accounting for other added benefits of outsourcing your third party warehousing. Some of these “intangibles” can really provide significant savings. They include:
- Ability to use as much or as little space as needed for warehousing, thereby eliminating the risk of warehouse leasing and time spent negotiating
- Synergy from opportunity cost of not having to spend valuable internal resources on distribution, thereby increasing time spent on other more important functions such as sales and marketing
Properly accounting for all costs and benefits will help you make the best decision regarding the use of third party warehousing. Don’t be short sighted when looking at the pricing proposals from fulfillment companies. Take into account all costs and you’ll set your business up for the greatest success possible.
Navigating the 3PL Market
The number of 3PLs in business today is good and bad for companies with logistical needs. It's great because there are many reputable companies offering competitive prices and fighting for your business. It's just not so great when you're trying to isolate the best companies that can meet your needs. That's where our network comes into play.
We help you secure quotes from reputable 3PL companies that provide services in line with your company's current needs. We do this free of charge, and we act quickly because we know that you have deadlines to meet and customers to please. The 3PLs that we work with also understand that you demand advanced knowledge, proven processes, and dependability because you take your business just as seriously as they take their own. That understanding and dedication to excellence and customer satisfaction is why they pass our rigorous testing process and are included within our carefully selected network of third-party logistics companies.
Scoping Out Their Strengths and Weaknesses of 3PL Firms
Analyzing 3PL company strengths and weaknesses is necessary if you want to find one that works well with your niche industry. If you're new to searching for warehouses, you may think all fulfillment centers are alike. They really aren't, and many have designs for specific companies. You may even find a few that say they're suited for specific industries when they really aren't.
Just like you would for any business, proper vetting helps you choose the right warehouse for your company. Doing this only helps yourself since having a good relationship with your 3PL is important to keep working with them long-term. You don't want to have to switch to another warehouse midstream just because you didn't take time to study the pros and cons.
So what are the biggest strengths and weaknesses you might encounter in a 3PL during the vetting process? Almost all of them have good and bad elements, though weaknesses can sometimes mean something positive.
Is Their Management Strong or Weak?
Management principles in most 3PL companies have various strengths and weaknesses. The most critical thing to find is whether the management in your warehouse has real vision for the future. Are they willing to tailor their services for your company structure?
If management treats their warehouse like a commodity service, it's best to move on to another. It's a must to have management with intent to expand and continuously update their technology to keep up with demands.
Also, check into how centralized the management is. When or if they expand to other geographic areas, management could become more decentralized and cause more logistics confusion.
How Strong or Weak is the In-House Technology?
A 3PL that doesn't invest in the latest warehouse technology obviously shows a major weakness. Most warehouses do, though you have to make sure they've streamlined it and integrated it into every department.
Top-tier technology is only as good as how it's used, and having examples in how the 3PL uses it can help you get faster answers on their strengths. More so, you can determine whether they keep up on the latest tech updates so they know what to invest in down the line.
Is Trained Staff Strong or Weak?
How much training has the warehouse given to their staff lately? Do they update training regularly, or do they wait several years before new training takes place?
A staff that's continually learning is a benefit to the 3PL you work with because they'll know every procedure without having to ask questions. Any employee with confusion on how to operate technology only leads to downtime. That can't happen in a warehouse where speed is mandatory to keep pace with shipping demands.
Make sure your 3PL has capable people working, including proper safety training to eliminate any risk of injury.
How Strong or Weak is Their Geographic Location(s)?
Do you know exactly where your 3PL's location is? Many of the best ones are near major ports, highways, and airports. If they're in a more remote area that takes an hour longer to get to transport service, it can matter in how fast a delivery takes place.
Geographic location also matters in any potential risk or danger from nature. Is the warehouse in an area where hurricanes frequently occur? A warehouse in Southern California may have risks from earthquakes.
These strengths and weaknesses can help you form a backup plan if something were to happen. Asking your 3PL if they have a disaster recovery plan in place is just as important as asking about management, costs, or technology.
Top Tips for Choosing the Best 3PL Company
When choosing a 3PL Warehouse company to manage all of your warehousing and fulfillment, we highly recommend keeping the following points in mind:
- Do your due diligence – Make sure that you screen every potential company thoroughly. Take a look at the facilities, contact customers of theirs, research them online, and look at their better business bureau report. All of these factors can help sniff out any fly by night companies. The main point here is that you want to make sure the company can process your orders without many errors.
- Thoroughly research their pricing – Oftentimes, logistics companies will not give you every potential cost that might be incurred on their quote or estimate. This is a common practice to try to get you to think that their costs are the best. So to combat this intentionally dishonest practice, please be sure to not only ask the provider for ALL potential costs, but also ask them to provide you with a mock bill based upon a month’s worth of data. If you do this, you’ll actually be able to compare price quotes among various 3PL providers. Unfortunately, most fulfillment companies charge different, so it makes the process all the more difficult
- Factor in the value of a partnership – Remember, this is a huge component for someone else to manage. It is such a critical part of your company that you want to be sure they can be a true partner. A partner is someone that you trust and feel comfortable with to entrust such a big task to. So ask yourself this question, “Do I generally get a good feel about this company?” If the answer is no, don’t make the mistake of convincing yourself that their low pricing makes up for lack of partnership value. Trust your instincts…after all, you’ll be communicating with.
- Consider the other Connections of the 3PL Provider - High quality 3PL firms will be able to connect you with other necessary providers, sometimes with the benefits of getting better rates. For example, some providers will have partnerships with high quality companies. Nonetheless, these partnerships can help get you in contact with other reliable partners for many necessary and related services and products.
Find the Best 3rd Party Warehouse
We can help you find the best 3rd party warehousing company with the best pricing for you. Members of our management team used to work in the Logistics industry, so we know what to look for in a provider. We’ve pre-screened 3rd Party Warehousing firms so that you can get multiple quotes from quality vendors. But you might be asking yourself why should I use a Warehouse Logistics company instead of doing all of the Distribution, Warehousing and Shipping myself? And will it really save my company money by Outsourcing? What kind of Rates do these companies charge? Thankfully, we can help you answer these questions.
Should you use a Warehousing Storage organization to store and ship your goods for you? The main question here involves strategy. Is the supply chain the most critical component of your business? Is it a source of competitive advantage for you? If so, you may not want to outsource. Rather, it might be best for you to pursue Warehouse Rentals, obtain a commercial lease of warehouse space, and perform the logistics yourself. However, if you’re like most companies, distribution is important, but it’s not your source of competitive edge. These days many 3PL companies offer solutions that are extremely high in quality and extremely low in error rates. And by outsourcing, you won’t have to think so much about the storage and shipping of your product. You can spend more time on trying to grow your business.
We Make the Process Easy – And It’s Completely Free to YOU
First, most 3PL companies claim that they will do a great job for you, even if they don't operate at a high level for other clients. It's usually very difficult to find out how well a 3PL performs without a thorough knowledge of the industry and an understanding of the things that you must look for in a provider. Second, other "referral" sites claim that they can connect you with top 3PL firms. The problem, as we found through independent research, is that they don't actually screen the companies. The truth is that our company is one of a kind in that we don't allow every 3PL company into our network. Rather, we conduct a through 5 point analysis before we accept a 3PL into our network. Most companies that we speak with don't make the cut. You'll be connected with high performing companies.
See How our 3PL Warehouse Matchmaking Service Works
Finding a 3PL Company is Fast, Easy, and FREE
Instead of searching through website after website, making calls to each of your chosen providers, and then trying to gauge their respective offerings and make an ultimate decision, we make the process fast and easy. Simply fill out one simple form, and we'll take your information and connect you with the most relevant and reputable providers that can meet you needs. You receive price quotes from 3PL firms within hours, and you'll have the peace of mind of knowing that each provider has been pre-screened by former 3PL executives. Perhaps best of all, our service is FREE to you and there is no obligation to use any of our providers.
Unlike Other Sources, We're Completely Unbiased
We use objective screening criteria so that we can identify the best 3PL companies. Many other referral companies simply sign up any 3PL that is willing to pay them, or they rank 3PL's in order of who will pay them the most money. We simply don't use any of these deceptive practices. Rather, we remain fully unbiased. And we don't collect any commissions from our 3PL vendors. Instead, they simply pay us a small per lead fee each time we introduce them to a prospect like you. That way, you don't have to worry about them increasing their service prices to you in order to cover commission payments.
Members of Our Team Used to Work in the 3PL Industry
We know exactly what to look for in a quality provider because members of our team used to work in the 3PL industry. We gained valuable experience and thus have the knowledge to understand your unique needs and connect you with providers that will not only do a good job but will also be able to perform the specific services you require. We understand that many people don't understand the industry on the whole and need a resource to help them navigate the complicated landscape. We're not only here to provider you with references for quality providers, but also as a resource for questions that you have about the 3PL industry on the whole. And for those of you that do understand the industry, we're able to easily and quickly connect you with quality providers that have passed through intensive screening.
Get Connected with Quality 3PL Firms in the US, Canada, and UK
Since we've been providing quality referrals for over 7 years, we have had time to develop relationships with top notch 3PL's all throughout the US, Canada, and the UK. We have an unmatched number of providers, so we can connect you with options in all areas of these three countries. And if by chance we don't have an option for a particular remote location, we can reach out to our extensive network and find quality options quickly.
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