How 3PL can reduce your logistic costs
With the increase in the number of options available for a product in the market, the amount of inventory is increasing day by day. The transportation and logistics is becoming more and more expensive. A lot of businesses are struggling in managing supply chain with in-house logistics. Hence, out-sourcing these services can reduce the load and make logistics cost-effective.
1. Public warehousing –shared spaces
The warehousing spaces are shared by more than one customer which means the company has to pay for only a part of that space. They do not need to pay for the whole space which reduces the warehousing costs to a large extent. Not only the rent for the space is shared but also the other overheads like labour, equipment etc.
2. Tech upgrade –developing expertise
Technological upgrade is one of the most expensive processes. Investing in technology is not easy for organisations but they can make use of the advanced technologies by out-sourcing 3PL services. They have build expertise in the areas of logistics by regularly upgrading their technology in terms of automation, inventory management and stock-keeping which is quiet expensive and not very feasible for companies from other sectors.
3. Avoid in-house investment
The investment in the in-house logistics can hamper financial condition of the organisation. A 3PL service provider can offer flexible packages to meet the need of their clients. As these packages are designed according to the requirement, the costs incurred also reduces.
4. Efficient transport management
A 3PL has a wide, well established network of transportation. They are able to manage different modes of transportation according to the requirement. In order to cut down costs, 3PL are capable of articulating shipments and package design as well. They are also aware of the changing tariffs which might not be the case with companies from different sectors.
5. Vendor managed inventory
It is a concept used by the manufacturing companies to out-source the warehousing services from 3PL. service providers. Manufacturers have huge quantities of goods and raw materials that need to be stored and used only when required. They do this by renting spaces with 3PL warehouses that can deliver the goods to the manufacturers when needed. This helps in keeping the production spaces uncluttered, reduce costs and increase the efficiency of supply chain.
Cutting supply chain costs can boost the profits of any business. With the increase in the complexity of the logistics and transportation networks, out-sourcing these services through 3PL can make operations far more easy and cost-efficient. These service providers do charge a fee but that could be less than what a business spends in building an in-house logistics system.