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Customer satisfaction is reliant on companies meeting their expectations. However, did you know that over a third of businesses will ship products late because they are not in stock?
Surely this statistic should ring alarm bells in companies everywhere. In-demand products are out of stock. Yet customers can still place orders. This leads to late deliveries and dissatisfaction.
Many are turning to third-party logistics providers to solve this problem. What are third-party logistics, and how can they help your business? Why not read our in-depth article to find out?
What Is a Third-Party Logistics Provider?
The supply chain is the journey of a product from production to customer. The third-party logistics provider will provide any number of services along the way. If you are looking for a simple and easy order fulfilment solution, Shape fulfils thousands of orders daily, ensuring you keep your promise to your customers.
They may transport parts or produced items. They may store items in warehouses. They may fulfil items by picking directly from this storage and sending it to the customer. They may do all of the above or a single service.
Many large companies are looking to learn more about 3PL providers as they provide key solutions. What else can 3PL providers do for a company?
Cost-Effectiveness
3PL providers work with many companies. This means that they have significant leverage with shipping agencies. Much more than the average company. They can negotiate lower than normal prices because they work with higher volumes and more frequent orders.
A company that hires 3PL benefits from this leverage. These savings are then passed on to each company. This allows them to pass savings on to their customers. They can also concentrate on product development and marketing rather than supply chain issues.
Scalable Solutions
Every company will experience fluctuations in sales and demand throughout the year. International politics will affect some markets more than others, affecting sales unexpectedly.
In other cases, companies may have seasonal work. Demand may change based on holidays or harvest time.
During peak times, their workforce and warehouse needs may be scaled up significantly. At other times of the year, it can be dropped to a skeleton team. 3PL providers can provide this flexibility to companies.
They are able to provide larger or smaller warehouse spaces as needed. The staff needed to care for these locations is provided according to the need at a given time.
Improved Customer Experience
Customer expectations have never been higher regarding fulfillment and shipping. Aware that next day shipping is available they will settle for nothing less or will voice their complaints when this is not fulfilled. Service management software enables you to keep track of every order and reduces the paperwork involved.
A 3PL provider will provide this service. Smart inventorying will ensure that stock is maintained. This means that there is no delay in shipping it and the customer receiving it. This is a significant way to increase your customer satisfaction rating.
Experiment in New Markets
Is your product expanding successfully? Are you ready to take it to the next stage and offer it to foreign markets? You do not have any experience with international logistics. However, fortunately, your 3PL provider does.
They will be able to provide the same logistics support in many locations around the world. This means that you will not have to research and learn logistics conditions for each country you want to expand into.
Further, if after experimenting you decide not to expand permanently into a country, you can simply withdraw. As the 3PL has provided all your warehousing needs, there are not investments or physical structures to sell.
Mitigate Against Risk
National or international shipping is subject to several conditions. Weather conditions or political changes can affect shipping arrangements instantly. It is at times like this that an effective risk management strategy is necessary.
If a company has employed a 3PL provider, then the 3PL will be responsible for handling all risks associated with the shipment. This frees the company of costs and responsibility for any delays in the delivery of goods or materials.
Benefit from the Experience of Others
Financial investment is always a crucial initial step in business. Knowing how much to invest in physical infrastructure such as warehouse space can be difficult. Further investing in personnel that will be contracted will have a bearing on the efficiency of a company during its initial years.
The usage of technology has increased in recent years. Tools such as pick and send and robots are expediting fulfillment. Other technologies such as Artificial Intelligence are providing insights into the efficiency of warehouse layouts. However, all of these require investments of time and money.
By employing the services of a 3PL provider the burden of all these investments is placed on them. The 3PL provider will provide the best technological solutions that a new company needs. However, this is with the minimum burden to the company during the crucial initial years.
Maintain Low Overheads
Both new and established companies are seeing the value of leaner warehouse space requirements. Further 3PL providers can provide accurate forecasting of stock needs. This can mean stock never runs out but also that too much stock is not held, and thus its footprint is never too large.
When it comes to warehousing, not having to maintain your own space and staff can be a big cost-saving measure. Also, 3PL companies provide good inventory forecasting. This can help optimize your inventory levels and save money on inventory holding costs.
Third-Party Logistics and Much More
If you are interested in third-party logistics and how to create a more efficient supply chain, we are here to help. We research and publish authoritative articles on all things business.
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