Factors to Consider When Choosing a 3PL: Part 3
To outsource or not to outsource..
With the growing complexity of logistics operations and globalization, many companies have chosen to outsource to a third party logistics service so they can concentrate on what they do best. A company can either build a logistics team entirely within the company or outsource the operations to a 3PL provider.
Advantages of in-house logistics:
With an in-house logistics management team, the advantages are:
• Companies know their business operations best
• It is easy to resolve any issues internally
• Flexible approaches
The disadvantages of managing in-house logistics operations are as below:
• Require huge manpower
• Huge initial investment
• Involves complex management and more work
• Technology upgrades can be costly to implement
• Less options for carriers and rates may not be competitive
• More overheads
Additionally, there can be unplanned expenses that can creep up such as rate fluctuations, new regulations that require upgrading to new technology or sales drops.
Advantages of 3PL
Outsourcing or 3PL market share in 2016 was $750 billion and expected to grow at a 4.6% in the next five years.
Outsourcing can give the following advantages over in-house logistics
• Less overheads
• No initial investment
• Less staff needed
• Better competitive rates from carriers
• Latest technologies
The cons of outsourcing can be difficult in maintaining the relationship and ending it. Outsourcing can mean less control over many aspects of supply chain and problems communicating with the transporters or drivers directly.
But with evolving symbiosis, 3PL companies are not merely service providers. 3PL’s are increasingly assuming a collaborative partnership with increased accountability and responsiveness. 3PL service providers are also quick to adapt to technology innovations – the demand of the hour.
According to a 2017 global study 97 % of 3PL service providers and 91 % of companies that have outsourced to 3PL describe their relationship as positive and successful. In 2012, 88% of companies that had outsourced had believed the arrangement was positive.
The study called 2017 21st Annual Third-Party Logistics Study, also highlighted the fact that 75% of companies that have resorted to 3PL found significant cost reduction in logistics while 86% of these believed customer service was also improved by outsourcing.
The right 3PL provider should be flexible enough to scale operations as required. Given the market fluctuations, there could be low or increased demand at times. A 3PL provider who has the required experience and width to handle all kinds of operational requirements is the right choice. Check if the provider has worked with both big and small enterprises before and is able to make constant adjustments to suit your changing shipping needs.
Oceanstar by Seldat has built a favorable reputation as a global transportation logistics and procurement partner over many decades. We provide the advice and supply chain management you need, whether it be for the procurement of products or the transportation of cargo via ocean, air, trucking, or rail. Click here to learn more about our network and contact us if you would be interested in speaking with an Oceanstar representative.