6 Key Benefits of Third-Party Logistics (3PL) in Supply Chain Management

It could be to expand customer base, venture into new markets, or create positive consumer experiences, but more and more businesses — big and small — are looking for external support and expertise to run their supply chain more efficiently and gain competitive advantage. And that’s where a third-party logistics (3PL, also known as TPL) provider comes in.

3PL providers are companies that offer comprehensive and even one-stop solutions for enterprise supply chains in packaging, warehousing, transportation and order fulfilment. 3PLs can identify and fill the gaps in your supply chain. Their expertise, best practices and technologies can integrate into your business processes to solve the most complex challenges in logistics and make your supply chain a more agile, responsive function — a necessity in today’s uncertain market environment.

Working with a 3PL provider is a partnership and must be treated as such rather than as a transactional relationship. Here are some of the key benefits of 3PL in supply chain management:

Drive Cost Savings

3PL firms specialize in logistics and thus will have a more extensive network than your company’s supply chain function. They will likely have exclusive relationships within the logistics sector, greater influence during negotiations, and will also be able to offer greater volume discounts to clients. All of this can minimize overhead costs.

By partnering with a 3PL firm in supply chain management, you can also save on making huge infrastructure investments as it can provide transportation, warehouse space, staff and tracking technology, among other things.

Get Access to Expertise and Experience

In today’s complex global market scenario, it is tough to anticipate and accommodate internal expertise in all the capacities and regions required. A 3PL provider will have knowledge and experience in matters such as transport documentation, import and export, international compliance and economic regulations, for instance. Businesses looking to expand into international markets can benefit from the logistics support and know-how that their partner can provide, thereby reducing costly delays, cutting down the cycle time, and making the entry into a new region smoother.

Focus on Core Competencies

Outsourcing logistics will give your organization the leeway to focus on its core competencies instead of getting involved in the management of non-core but critical functions. Your business can enjoy the benefits of logistical expertise without deploying internal resources.

Gain Flexibility and Scalability

The advantage of third-party logistics in supply chain management is that it offers enterprises the flexibility and scalability to utilize supply and distribution resources based on current business needs. Thus, when sales are down, there are no redundant investments and unutilized resources, and when there’s a surge in demand, enterprises can upscale. 

Enable Business Growth and Market Expansion

The role of third-party logistics in supply chain management is to enable business growth by giving companies access to markets where they don’t have an established presence. Being able to manage inventory in a new market without having to spend money on warehousing, equipment, and labor can save money, as well as the effort of learning the logistical nuances of a new market.

Improve Customer Satisfaction

All of the aforesaid benefits will lead to improved services and response time, timely deliveries and greater brand reliability. This translates to satisfied customers — the fundamental goal of all businesses.