Are you an entrepreneur with a growing company? You may begin to experience the challenges of your increased customer base. For some businesses, whether new locations or updated manufacturing methods, increased capital needs and overhead may take a toll. It may be time to look for outside-the-box solutions, such as a third-party logistics provider.
As your business grows, rising costs and increasing demand on your time when ordering fulfillment and shipping might be challenging. By partnering with a third-party logistics provider, you can address these challenges. This means you have more time to focus on the other aspects of running and growing a business, such as product development and marketing.
From transportation to warehousing and managing your supply chain, third-party logistics providers offer various services and solutions to business owners like you. If you aren’t sure what a third-party logistics provider is and what they can do for your business, then you’ve come to the right place. Let’s learn more about what is a third party logistics provider.
What is a Third-Party Logistics Provider?
A third-party logistics provider is a specialized business that helps e-commerce companies manage their supply chain. They provide logistics services like warehousing, transportation, order fulfillment, shipping and returns. They can also offer services for materials procurement, customs brokerage, and inventory management.
As any business grows, it may inevitably need help with inventory and distribution. A third-party logistics provider can cost-effectively resolve these issues for you.
Why Use Third-Party Logistics Services
By outsourcing your logistics to the experts, you can better care for the rest of your business needs. While it’s true that packing and shipping your orders from your warehouse might seem cheaper than utilizing a third-party logistics provider, the truth is that if you want to scale your business, it’s not always feasible to handle all the pieces yourself.
You must factor in your growth potential when determining the value of hiring outside help. By partnering with a logistics company, you can pursue more opportunities to expand your business. Let’s look at the benefits of using a third-party logistics provider.
The Benefits of Third-Party Logistics
A third-party logistics provider gives you access to a network of warehouses, global transportation methods and tech resources that your company can utilize without having a massive upfront investment.
Using outside warehousing services means you don’t need to pay the overhead costs of maintaining your warehouse. The other main area of savings comes from the savings on shipping a third-party logistics provider offers. Because of the volume of shipping that they do, these providers are generally able to negotiate much better carrier rates than the average company can.
There are many benefits for your customers as well. With a third-party logistics provider, you will typically see much faster delivery speed, better order tracking, high-quality packaging, and improved communication. These all contribute directly to customer satisfaction.
How Third-Party Logistics Works
In a typical scenario, the third-party logistics provider receives your inventory at its warehouse and organizes each item. When a customer orders on your website, it goes to the warehouse or distribution centre.
A warehouse employee picks up the order and packs it for shipping. The shipping carrier will collect the package and deliver it to the customer. The third-party logistics provider will plan for and implement the receiving of your inventory to their warehouse. They will also maintain your inventory in whatever conditions are appropriate.
Difference Between Third-Part Logistics and Freight Forwarding
At first glance, these two services may seem very similar; however, there are many differences. A company offering freight forwarding does not take care of the shipping. They simply act as the middleman between your business and the shipping company. The freight forwarder’s main concerns are price negotiation, mode of transport and shipping routes.
A third-party logistics provider brings many more services to their customers. Additionally, the third-party logistics provider takes responsibility for the goods they are handling, whereas a freight forwarding company typically does not.
When to Consider a Third-Party Logistics Provider
To decide if your business would benefit from outsourcing to a third-party logistics provider, there are a few aspects to consider. It needs to make financial sense, and it needs to be a solution that will simplify the day-to-day running of your company.
If your business is growing at a pace, you can’t keep up with, a third-party logistics provider could help you maintain growth without sacrificing your resources. Ultimately it doesn’t matter what industry you are in or how big your company is. If you don’t have the infrastructure, transportation fleet, and tech expertise required to keep up with your company’s expansion, a third-party logistics provider can provide you with these things.