What is the role of 3PL for an SME?
As your SME (small and medium-size enterprise) seeks to expand, there must come a time when 3PL (third-party logistics) consideration will take place. But what exactly are the benefits to hiring a 3PL to deliver your business’s warehouse requirements? Wouldn’t that come at a disproportionate expense?
This thought is one of the most common misconceptions of 3PL, as there are many advantages (namely time) which include cost saving which comes as a huge surprise to many SME’s first starting out in 3PL collaboration. This article seeks to highlight these advantages and how 3PL can in most cases be a vital piece to longer-term growth.
Without large economies of scale, investing the capital into purchasing a warehouse and the subsequent expenses attached with that are both large and continual; with many businesses beginning to increasingly turn to outsource their warehousing to logistics specialists (especially after the tumultuous effects of Covid-19 in recent years). While the amount of time that must be paid in ensuring the efficient running of an internally run warehouse overwhelms many businesses, the investment often also detracts from core parts of businesses not experienced in the warehousing space.
To name a few, the capital costs of purchasing your own warehouse include real estate costs, full-time labour costs, obtaining permitslicenses, and renovation costs to optimise internal layouts, and distribution channels amongst others. With all these aspects demanding sufficient attention, businesses must consider the sacrifices that must be made from their core business and determine whether it is worth the trouble of pausing many fundamental areas that make their business tick at the expense of warehouse activities.
So, with all these elements considered, we must now return to our original question. What exactly are the benefits of hiring a 3PL as opposed to doing it yourself? The act of outsourcing all warehousing tasks to a 3PL provider that offers an ‘all-inclusive’ service ensures your business not only precious time to focus on your businesses core products and services but also mitigates against any cost issues that inevitably your business will come up against (due to the fragility of the 3PL industry). The collaborative partnership with an experienced 3PL provider more often than not permits the efficient uses of often limited resources in an SME, which seemingly comes at a premium in today’s fluctuating economy.
For specified, black-and-white advantages to outsourcing, this piece discusses four main benefits:
Scalability and Flexibility: you only ever pay for the space you use, which is especially crucial for SMEs whose inventory levels fluctuate throughout the year. 3PLs offer the flexibility and adaptability to scale inventory levels to meet your business needs and offset the inevitability of needing to pay for space you simply will not use for many parts of the year (or at all if demand projects are incorrectly forecasted).
Labour: warehousing involves various tasks that include order fulfilment, loading, and distribution to name a few. The cost involved in hiring an employee to carry out these jobs is obvious, not to mention the training costs that may be required to align with your company’s business model.
Technological advantages: experienced 3PLs offer industry-leading software programs that give your business access to transparency within your supply chain that not only offers clarity to you, but a value-added service to your own clients. Outsourcing 3PLs ensures access to state-of-the-art warehousing facilities and management software without making substantial capital investments.
Industry Experience: the advantage here lies in your expectations of warehousing proficiency. In most cases, internally creating proficiency does not take place overnight, not to mention at a cost. Employing a 3PL provider makes sure heightened efficiency is instantly achieved, allowing you access to a wide range of markets and experience instantly and with no overheads.
So, what can TGL do? Industry-leading freight forwarders combine their supply chain solutions with 3PL services to enable holistic solutions for their clients. This is precisely what TGL achieves, catering additional warehousing services to new and existing clients through their own warehouse and state-of-the-art technology and processes to go alongside it. TGL’s warehouse staff will provide complete 3PL services and ensures efficiencies not easily achieved with internally developed warehousing.
For more information, be sure to get in contact with TGL at email@example.com or 1800 845 845.
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