Nowadays, e-commerce companies of all sizes—large, medium and small—and their logistics partners worldwide are facing certain unique challenges. First of all, online shopping demands are higher than ever before. Second, the demand for speedy, dependable and cost-effective delivery services is growing by the day as most customers want goods delivered within 2-3 days. And third, rising fuel costs and truck shortage are impacting operations logistics.
But it is the fourth challenge that affects small and medium-sized business operations more—the Amazon factor. Leading e-commerce giants, such as Walmart and Amazon, spend millions of dollars on logistics. Their speed comes from fully automated warehouses with robots and logistics platforms that notify customers and employees well ahead of time. A small company simply cannot afford to invest in logistics processes of such massive scale. So, small and medium retailers can either buy, or develop effective logistics solutions tailored to their needs to improve upon their delivery promises. Here’s where third party logistics (3PL) companies become indispensable.
Most MSMEs and large companies outsource their order processing to third-party logistics (3PL) providers, such as Borzo, Shadowfax, Blue Dart, Delhivery, DHL, Amazon etc. Small and medium-size businesses are following the same route to take full advantage of the experience that 3PL can offer them. It may seem a big leap for a small business to outsource logistics, but it can actually help increase sales growth and provide a market differentiator to stay ahead of the curve. 3PL can help businesses with warehouse optimization, save money by keeping processes lean and assist in long-term growth.
Pay for what you use
Things become difficult for supply chain managers because demand cannot be predicted with 100% accuracy. In a business, unplanned situations crop up almost every day, leading to an ever-changing inventory management target. Capacity enhancement is capital-intensive and can be time-consuming, too. So, it is not always feasible for companies to increase capacity rapidly when required.
3PL providers offer flexibility in storage capacity. They can easily handle seasonal demand fluctuations as they serve multiple customers from the same facility. By teaming up with a 3PL provider, a business can opt to pay for only what it uses and guard itself against unpredictable warehousing needs and the costs linked to those.
Reporting & analytics
Businesses should carry out thorough assessments of their operational processes regularly to ensure continuous improvement. Analytics can provide greater visibility of their efficiencies and overall warehouse management, revealing not only the number of units moved, but also areas that need attention. Analytics should be embedded into the warehouse IT infrastructure—that is the only way to ensure that the right data sets are captured efficiently. Any good 3PL provider, such as Borzo, has robust analytics tools in place and can provide full visibility of customer products and detailed information on each stock-keeping unit along with its performance.
Value-added services
Today’s 3PL providers offer such value-added services as quality checks, packaging, labelling, bulk breaking and last-mile distribution. Most small and medium businesses are likely to face operational challenges if they try to manage these multifarious functions under one roof. They, basically, do not have the infrastructure to manage the intricacies that a multi-functional facility has.
A 3PL provider has the requisite equipment, capacity, labour force and industry expertise to provide value-added services and is equipped with the skill to ensure smooth flow of operations. Bundling all the services together, they offer customers savings in terms of cost and time and improvement of the overall warehousing experience.
Single-point logistics solution
Companies that manage their own warehouses often have to face issues in integrating the entire chain and linking the different partners together—including in the areas of freight forwarding, packaging and last-mile delivery. A competent 3PL provider is not only experienced, but also has long-standing relationships to fit all these pieces together efficiently. By outsourcing this logistics maze, a small or medium business will no longer have to bother about managing different partners. Moreover, their 3PL partner will provide them with a single-point solution for all their logistics needs by providing them with a strategy to achieve long-term goals.
Businesses of all sizes know how important it is to partner with an experienced 3PL provider. Small and medium-size businesses can enjoy the benefits of modern warehousing facilities without adding extra—and needless—costs by partnering with a 3PL provider. Warehousing and distribution are the key competencies of 3PL providers. They have the infrastructure and expertise to manage it better and also reduce the overall cost of your supply chain process.