Some Companies Turn to Third Party Logistics to Save Money

Now, more than ever, your organization needs to cut overhead costs, operation expenses and improve your efficiency – without sacrificing quality service to your local customers. This may require you to change the way you handle your product management, including a switch to third party logistics (3PL). Making the switch to third party logistics can not only save you money in key areas like warehousing, inventory management, storage, transportation and distribution, it can also help you return to your core strength: managing and enhancing your product.

Shipping Costs That are Tangible with Third Party Logistics

Businesses who do a large amount of shipping already know that they can realize marked savings when switching to a third party logistics provider, as much as 15 percent in some studies. Part of this savings occurs because 3PL providers are experts at their field; they know how to get your product to your buyers at every step along the process. Building on this expertise, third party logistics providers are concentrating on how to get your product from your warehouse to your customer in as fast a timeframe as possible, without spending time and money on product movement that’s not required. Another bonus: organizations can tap into the complex IT systems of their third party provider, which are custom-built for efficient product movement but don’t carry the expense of creating and managing their own systems.

Save Warehousing Dollars with Third Party Logistics

Is keeping up your organization’s own warehousing team really cost effective? You’re allocating precious resources to staff salaries, warehouse rent and utilities. If you’re handling your warehousing needs on your own, you’re also spending core resources on payroll preparation, keeping track of warehouse contracts and rent schedules and liability or workers’ compensation insurance fees. Most of these costs remain the same whether or not your warehouse space is full – so you could actually be paying for all of these entities on empty space. Organizations who employ third party logistics for warehousing see a decline in all of these cost areas. They have the satisfaction of knowing they’re only paying for warehouse space and worker fees they’re actually using.

Savings That Spill Over with Third Party Logistics

Organizations who use third party logistics for tasks like warehousing, distribution and inventory management are not only saving costs on direct services related to these functions. They’re also realizing back office costs by producing fewer shipment errors, chargeback costs for shipping, or missing orders. Don’t have a person on-staff devoted to negotiating for freight or warehouse pricing? Third party logistics providers do, and many organizations are seeing solid savings through this aspect. Instead of spending a whole morning on the phone arranging product freight negotiations, you can gain that valuable time back to look at forecasting or market trends.

Order Fulfillment – Serious Savings with Third Party Logistics, Plus Customization

An outstanding feature of third party logistics that can directly impact your bottom line is the accuracy and speed of order fulfillment provided by top vendors in the industry. In fact, according to IntegraCore, a leading third party logistics provider, customers have saved as much as 60 percent on overall operating costs. Specialized packaging, bundling and customer-driven demands can be met with third party vendors while you see fewer errors and reduced costs for labor. Most vendors allow you to log in and view all product information in real-time, anytime, so you’ll have fast access to order status and can identify any challenges before they materialize. Look for vendors that can offer services like rushed orders and custom order fulfillment.

Tips for Further Third Party Logistics Savings

Make sure your third party logistics solutions provider has the flexibility to give you last-minute order processing, or to handle a jump in warehousing or services needed, such as customer-specific picking or packing requirements. Additionally, look for vendors whose computer processes can remain steady and productive during product emergencies and can provide precise, SKU-based tracking for items. You can save additional dollars by finding a third party logistics provider that bundles freight forwarding, trucking services, brokerage and distribution together with warehousing services.

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