by Nathan Rothfield
3PL is the acronym for third-party logistics operations. It’s a service that manages all the logistics for delivering products to your customers on behalf of your business.
Logistics service providers can offer services including:
Having third-party logistics providers can offer a host of benefits.
ScalabilityScale up and down as demand changes throughout the year without needing Capex.
Mitigate riskLet your 3PL logistics company deal with freight delays and lost or damaged goods.
Cost savingsThird-party logistics companies can negotiate bulk freight prices to save you money on shipping costs. You also bank the cost savings of not owning a warehouse and its staff.
Customer satisfactionOnline shopping is booming, and rising customer expectations of fast shipping as standard. A third-party logistics provider has the scale, network and expertise to improve your customers’ experience.
If you’re considering a relationship or project, you should consider several key criteria to inform your choice of third-party logistics providers in Australia.
The essential strategy is to align your needs with those of third-party logistics providers who are well-matched to solve your logistics challenges. If you’re a micro-business, you might feel overwhelmed in a 3PL supply chain dominated by industry giants. Equally, if you’re a big player, there’s no point choosing a 3PL minnow that lacks the third-party logistics warehouses and distribution network you need.
Consider the following criteria when selecting a third-party logistics service provider:
It can be challenging to know when to leap into 3PL. Because every business is unique, every third-party logistics solution should be unique. There is no such thing as a ‘standard business’, so suitable 3PL providers will approach supply chain processes with an open mind.
There are a few factors to help you decide when to choose 3PL over your own warehouse or fulfilment centre. If you answer yes to any of these questions, it’s a good signal that a 3PL provider could benefit your business.
Whatever your business scale, the products you sell must be stored before the customer gets them. This could range from a spare bedroom to a garage or storeroom for small businesses, all the way up to your own warehouse.
But whatever the size of your storage capacity, if you’re full to the brim and bursting at the seams, you need a hand. Expanding storage consumes spare capital that can be freed up when growing your business.
When you consider spending 21% of a company’s logistical costs on inventory carrying, it makes sense to minimise these costs by employing a more efficient 3PL.
Outsourcing supply chain operations and logistics operations to a third-party logistics provider could be the motivator to take the next step in your company’s evolution.
We can’t put an exact number on it because there are too many variables, but experience says that when shipping volumes reach three digits every month, it’s time to pause and reflect.
Is it efficient for you to be involved in this aspect of order fulfilment services when you can never be as efficient or expert at it as a 3PL specialist?
Wouldn’t it be more productive to spend the time and effort currently going into logistics doing what you do best? So you can focus on your core activities and outsource the rest?
Just say you are lucky enough to be overwhelmed with orders. That’s a great problem to have. But how well and fast could you respond?
Can you rapidly scale up warehousing, staff, operational systems, and IT as well as handle the sudden challenge of cashflow demands?
Or would it make more sense to find a 3PL supply chain provider to handle the logistics while you focus on managing the other aspects of increased demand?
If you are contemplating moving from independently managing your company’s supply chain to outsourcing your shipping logistics to external party logistics providers, consider the following five crucial steps.
The first step is to establish what kind of third-party logistics you need. That will in turn depend on your business, scale and demands. There are four types of 3PL options you can choose from.
They offer end-to-end supply chain operations and logistics operations, everything from fulfilment services, shipping, inventory management, warehousing and freight logistics.
If you already have a factory and a warehouse space, this third-party logistics provider could offer transportation services to move your goods from one to the other or between a store and a customer. This could involve freight forwarders, interstate trucking or local couriers.
These provide a warehouse space or fulfilment centre solution that includes a network of distribution centres close to your market. They provide storage of your inventory, manage shipping costs and handle returns.
These logistics providers offer the most comprehensive supply-chain management for businesses that value granular data. You’ll be able to gain insights into product-specific costs, customer behaviour, unit economics, cost accounting, shipping costs and inventory management.
Third-party logistics does not need to start and end with order fulfilment i.e. getting a finished product to a customer. Your entire supply chain encompasses all of your suppliers, the stock you purchase and all the associated administration.
3PL providers with smart tech supply-chain financing capabilities can be a real game-changer for any eCommerce store, managing suppliers on your behalf, delivering stock and consolidating your invoicing.
One benefit of a cloud-based third-party logistics solution is gaining enterprise-level security, processing speed and reliability.
Another benefit is that your scope becomes global. You can expand to international markets when your software is in the cloud.
Ecommerce has a bright future in the cloud and with a 3PL provider that has a flexible system that seamlessly integrates with major eCommerce platforms, your business has a bright future, too.
As a business, you need to know what’s in the warehouse, on the road, in the process of being delivered, delivered and returned. You should choose logistics providers who can give you essential real-time data analytics on your inventory.
This could include:
Integrating your business systems seamlessly into your chosen third-party logistics provider is vital.
Your 3PL should be in the business of making your work easier, including automating manual procedures as much as possible through the clever integration of APIs.
Before you sign on the dotted line, confirm that the 3PL integrates with your:
Aligning your operational systems with that of 3PL providers ensures that orders are automatically picked, packed, and shipped with updated inventory levels.
In an ideal world, integrations mean your order management system becomes the single source of truth, whether you’re posting orders from your warehouse or using third-party logistics.
Some 3PL specialists can also integrate print procurement and Intelligent Direct Mail Solutions to make your logistics challenges a breeze.
To put your 3PL eggs in the right basket, contact us at Rothfield to discuss a bespoke 3PL warehousing solution for your unique business.
Rothfield Connect is our cloud-based platform that puts you in total control of your inventory. We can easily guide you through the entire process end-to-end: no dramas, problems solved.
For more information about how we can help with your 3PL needs:
