Running a business is complicated
Anyone who runs one would be able to tell you the same. There are employees to manage, product to inspect, customers to please, and most cumbersome of all, your distribution system to manage.
It can make sense, therefore, to offload a good portion of this work to outside contractors. We call these contractors Third Party Logistics Companies (3PLs), and they can be a great boon to your business. However, if you don’t pay attention and manage your expectations, they can be a drag on it as well. In this week’s Educational section, we’ll be going over some of the benefits and detriments that employing a 3PL can have for your business.
There are Some Potential Benefits:
- 3PLs can bring important experience to your company’s shipping and handling department. What’s more, they can do this without you needing to hire a specialist on your payroll.
- Hiring a 3PL can give you almost immediate access to additional storage space. (Although we at CTI make our bread and butter designing efficient warehouses for our customers, we recognize that this is not always practical!)
- Shipping overseas can bring with it a whole set of logistical nightmares more demanding than any monster under a bed. Forms need to be submitted, duties need to be paid, tariffs need to be minded, and country-specifc regulations need to be accounted for. This can be enough work for a full time employee (and for some employees, it is!). By using a 3PL, you can end up paying a fraction of that price, for just as much experience.
- Ask anyone who owns and maintains their own warehouse how expensive it can get. Space is expensive, repairs are expensive, and the whole affair can give you stress you’d rather avoid. Contracting with a 3PL gives you almost immediate access to storage space, and shipping capabilities.
So, if your warehouse looks like this:
and you’d like quick access to something like this:
That is not to say that contracting with a 3PL is absolutely going to be sunshine and daisies, though.
Here are Some Potential Detriments
- If you use a 3PL for your shipping, you are ceding control of the process to them. If they are a competent company with experience, this will almost certainly not be an issue. However, mistakes happen in any field, and if something should go awry with a shipment, your customers will hold you accountable for the 3PL’s mistakes.
- Depending upon the size and situation of your company, the upfront investment of contracting a 3PL to handle your logistics may be more than you’re willing to stomach.
- Similarly to your accountability in shipping, there will necessarily be more distance between yourself and the product you sell. There is something to be said for having the peace-of-mind which accompanies being able to see your product every step of the way, and this should not be discounted.
- When you use a 3PL, your product could end up here:
without your touching it.
So, should you go with a 3PL?
It depends! As annoying as that is to hear, while you are the master of your product, you may not be the master of moving it.
If you’re sold on going 3PL, we congratulate you!
If you aren’t, give us a call, and we’ll come out to see how we can help!