The vast majority of Fortune 500 businesses outsource most or all of their logistics and supply chain operations to a third party. Armstrong & Associates, a marketing research think tank that focuses on the third-party logistics industry, released a report in 2017 that tags the percentage of firms using third party providers at around 90%.
According to the report, regardless of whether a business primarily does B2B or B2C, the most financially successful companies in the world find several benefits to outsourcing at least some of their logistics functions.
Fortunately, these benefits apply to smaller businesses as well. Third-party logistics services are now so accessible that even microbusinesses regularly use at least one specialized logistics service provider to handle most if not all of their supply chain.
If you’re considering teaming up with a third-party logistics service, here are some of the benefits that you can expect almost immediately:
1. Cost and labor savings
Developing your own logistics capability can be a costly and labor-intensive undertaking. Many businesses can barely hire a regular delivery person or courier, let alone invest in the capacity to make complex logistics operations run smoothly.
Unless all your suppliers and customers happen to be next door, using a logistics service provider is always going to be the least expensive way to get your supply chain moving.
2. Better efficiency
Compared to most in-house logistics departments, third-party logistics providers can dedicate more resources to the different aspects of supply chain management. They have the experience, the time and technology investments, and the expertise to efficiently perform different logistics functions. This means that they will be able to perform at a higher level of efficiency and make fewer mistakes than most in-house logistics departments. This also means your supply, warehousing, and order fulfillment gets done faster and with fewer hitches.
3. Increased customer satisfaction
To continue off the previous point, better supply, warehousing, and order fulfillment means that customers get their orders sooner. They’re also less likely to find that the item they want is out of stock at your store. This all makes for a more positive customer experience and increases the chances of repeat orders.
4. An improved focus on your unique competencies
Supply chain and logistics management is a complex and time-sensitive operation. The minutiae of logistics can easily bog an organization down and distract it from developing its unique strengths. Teaming up with a logistics service to handle day-to-day logistics processes is almost mandatory if you want to keep your business focused and on-point.
5. Access to custom solutions
Most logistics providers have access to specialized technologies and have partnerships with other services that would be impossible for most businesses to obtain by themselves. This expands the available supply chain options and also links your business to a much wider market.
6. Better familiarization with logistics and supply chain issues
While there isn’t much reason for most businesses to operate an internal logistics arm, it’s important to understand what happens in a supply chain. By teaming up with a logistics provider, you’re in a better position to uncover different opportunities for improving your processes and for expanding your business’s reach.
Using a third-party logistics company can do wonders to reduce your overhead while improving the flow of your supply chain. They can also be a vital component in your formula for customer satisfaction, just as it is for the majority of the world’s most successful businesses.
