Companies that have operations in many different locations know how important it is to create a good logistical infrastructure. Simply put, they need to ensure that all their facilities deliver various products that they need while making sure that they are delivered on time.
Even though some companies choose to have their own logistical operations, there are those that outsource logistical tasks to third party logistics providers. However, this model has both its fair share of upsides and downsides.
Here are the advantages and disadvantages of third party logistics providers:
Advantages of Third Party Logistics
Third party logistics are your source for specialized logistics services. Here are a few benefits you can expect to experience:
Reduced costs
Third-party logistics companies have established logistical infrastructures, software support, and practices that allow them to quickly improve shipping efficiency for another business. They also provide reduced costs because outsourcing your logistics means no more in-house logistics team on your daily payroll.
Reduced strain on a business
Companies that have multiple operations struggle with organizing the amount of work they have. This applies especially to smaller companies. In all of this chaos, it simply makes sense to outsource logistics processes to someone else while allowing the company to use its resources and knowledge on its primary tasks.
Specialized services
3PL companies have an advantage in logistics compared to companies that need it. Their only focus is to provide and improve their logistic support services. This is what they specialize in and they have more experience, knowledge, and technology that other companies lack.
Scalability
3PLs are the ideal solution for companies that need scalability options. Companies need the freedom to scale the size of their company when the demand presents itself. This is especially pertinent for new companies.
With a 3PL, you can scale your business and inventory without the risk of sunk costs in real estate, personnel, or equipment. When consumer demand increases quickly, 3PLs are prepared to scale up your business activity. 3PLs can easily add services and increase inventory as needed.
Scaling up is a difficult task to handle, no matter your business. 3PLs specialize in scaling inventory up and down quickly, so you’ll be sure to benefit from this expertise.
Disadvantages of Third Party Logistics
Any form of outsourcing has its downfalls. Although the benefits outweigh the negatives, you can expect a few downfalls you can expect with a 3PL:
Lack of communication
Sometimes, it can be difficult to find a third-party logistics company that will work together with a business on mutual goals. In order to maximize the efficiency of your logistics functions, your goals need to be clearly set. Make sure the company you hire is great at communication.
Essentially, this is a partnership in which both sides need to collaborate, or they will both suffer devastating consequences.
Increased dependency
Giving your logistical tasks to a third party means that you will have to take on a large commitment. Every organization needs a well-established structure to prosper and achieve good business results. When you commit to a third party logistics provider you will be handing off all your logistics functions to them. This increases your dependency on them but saves you time to focus on your core business goals. Make sure to vet your candidates to guarantee you’re choosing the most dependable and reliable provider.
Limited direct insights into logistical operations
Handing over your logistical operations to another business means that you won’t have direct control over what’s happening. Of course, you can communicate and consult with your partners on a regular basis but in reality, you don’t have real oversight. Companies like JRC Dedicated Services, are committed to communicating your logistics functions all the way until final delivery.
JRC Dedicated Services Third Party Logistics
A business needs to be responsible and thorough when outsourcing their logistics. Fundamentally, it all comes down to analyzing your business needs and weighing advantages vs disadvantages to determine the right course of action. A third party logistics provider, like JRC Dedicated Services, provides efficient and communicative logistics to all their clients.
JRC Dedicated Services can help your business thrive as a reliable third party logistics partner. We can help you scale up, reduce the pressure on your business, and provide specialized expertise, all while providing excellent customer service and direct insight into your business operations. For more information on how you can benefit from a trusted partnership with a 3PL, reach out to us today!
