Outsourcing parts of the supply chain to a logistics provider has become commonplace for organizations further along in their growth cycle.
According to a report from Armstrong & Associates, over 90% of Fortune 500 companies stated that they use a third-party logistics provider in some capacity, and that trend is only increasing.
A study published by Gartner stated that 85% of logistics leaders expect their outsourcing budgets to continue to increase, paving the way for more 3PL usage.
So, what reason is driving enterprises toward outsourcing their logistics function? There are more answers than you may think.
Let’s explore some of the benefits of working with the right logistics provider.
Improved Service
For many CPG shippers, reliable, quality service can be an issue, especially for those delivering to retail customers with strict appointment times and due dates. A good logistics provider should assist your organization in improving the quality of service.
Improved service can ensure orders are picked up and delivered on time, keeping your customers happy while avoiding costly retail vendor chargebacks and schedule disruptions.
Organizational Alignment
A true logistics partner can help your organization develop and implement processes to align various parts of your operation. Often, poor delivery performance is rooted in misalignment among production, transportation, and warehousing functions.
A value-added logistics provider can help your organization develop best practices to develop synergies for improved performance and lowered supply chain costs.
Industry Expertise
Logistics providers should possess extensive transportation expertise and industry relationships, which can help your organization stay ahead of freight trends and upcoming regulations. A true logistics partner should also have extensive knowledge of standout vendors to help your organization ensure it receives the best freight outcomes possible.
Specialized Knowledge
As the usage of third-party logistics providers becomes increasingly prevalent, the marketplace continues to command specialization. No longer is a logistics provider’s value in its ability to simply arrange transportation for your organization. Instead, organizations that work with specialists that understand their industry and customers are emerging with an advantage.
Cost Savings
Along with volume discounts and account-specific pricing, a good logistics provider should assist your organization in cost reduction. They can work with your organization to develop effective consolidation programs, network reconfiguration, and efficiency improvements, all of which can profoundly impact spending.
Scalability
You can more easily manage high and low seasons with the assistance of a logistics provider. A good partner will also help you rapidly respond to increases in demand or expansion. Third-party providers are connected to service providers nationwide and can more quickly respond to flux, linking you to resources without any added risk or legwork.
Network Strength
Properly vetting carriers to ensure they can meet your organization’s needs is an extensive task; however, a logistics provider will allow you to circumvent that time-consuming initiative.
Third-party providers have expansive networks and a carrier to meet every one of your order requirements. Because of their already built-in networks, a logistics partner can help you secure more capacity, which can help you deliver to your most valuable customers on time.
Access to Transportation Management Systems and Other Tech
A considerable cost associated with running an in-house logistics operation is the technological investment necessary for doing business.
Because an excellent third-party provider will come equipped with a tech suite, they can save your organization the upfront spend in applications. A good provider allows customers to track their freight, isolate key performance metrics, and monitor their operation’s performance.
Labor Cost Savings and Time Restoration
Managing a day-to-day transportation operation requires a considerable amount of time. From booking orders to ensuring drivers arrive at their destination takes hours of attention. But with a third-party provider, your organization can alleviate personnel of those duties so that they can focus on other tasks.
Some things you can expect to be taken off your plate:
- Appointment Scheduling for Pickup and Delivery
- Transportation Mode Selection
- Carrier Selection
- Driver and Facility Communication
- Logistics Relationship Building
- Freight Visibility and Order Tracking
- Issue Management
- Billing and Paperwork
- Performance Reporting and Data Analysis
- Facilitating Scalable Growth
Performance Exception Management
Not all deliveries go as planned. Sometimes trucks break down, schedules get derailed, and orders get rejected. It is how you respond and fix them that counts.
Shippers may need to find temporary warehousing solutions or find carriers willing to recover the load and yet another to complete a re-delivery.
It is a time-consuming process that can take multiple steps to solve. A customer-focused transportation service provider can step in on your behalf.
See How a Logistics Provider Can Help You Reach Your Transportation Goals
Zipline Logistics is a service-oriented transportation services provider that works with consumer product brands on a strategic level to optimize performance and save them time and money.
By partnering with Zipline Logistics, you can eliminate the need for a large transportation department. A partnership will save your business money and give your employees more time to focus on other essential tasks.
Are you looking to outsource transportation services?
