icon06 Dec, 2022
5 Benefits of Outsourcing Logistics
The logistics that come along with running a business can be complicated and expensive. This is especially true for mid-sized companies with significant logistics needs, but that aren’t big enough to hire an entire team of logistics specialists. Outsourcing logistics services is a practical way for companies to stop pouring resources into logistics so they can start pouring more into what they do best. Here are just some of the benefits that come along with that.
What Are the Benefits of Outsourcing Logistics?
It Helps Cut Costs
In business, the bottom line is typically the first thing considered when making decisions. If an operational change doesn’t offer ROI and help you make more money or help you save money, that change probably isn’t right for the business. Outsourcing logistics is one business decision that can cut costs in a variety of ways. Here are some of them.
Economies of Scale
3PLs and other managed logistics providers can often use their connections and economy of scale to save their customers money on shipping and other logistics costs. Because the 3PL ships more freight, they may have access to bulk discounts shippers wouldn’t be able to obtain on their own.
Cut Back on Infrastructure Investments
Of course, the costs of infrastructure are built into the costs of managed logistics services, but since that infrastructure is shared amongst the logistics provider’s customers you don’t have to fit the whole bill. It also means that you can avoid surprise bills for things like repairs.
3PL Tech = Efficiency
3PLs commonly utilize cutting-edge technology, often proprietary in design, to offer their customers efficiency. This tech can automate processes, offer visibility, and help you and/or the logistics provider make smarter, more efficient decisions that expend fewer resources but get more done.
Stop Paying for Extraneous Logistics Functions
Managed logistics or outsourced logistics services also help cut costs by allowing companies to use only the services they need at a given time. Don’t need an entire warehouse’s worth of space all year long because your business is mostly seasonal? No problem. Need twice as much staff during peak? Logistics outsourcing can mean hiring seasonal labor is no longer your problem
Outsourcing Logistics Offers Scalability
By contracting a 3PL or other partner for logistics outsourcing, companies can scale up their operations, getting more done without hiring new team members. It also allows you to cut back quickly and easily on your logistics services and the costs associated with those services without laying anyone off.
When the economy is uncertain as it is now, outsourcing is an ideal solution for logistics since it doesn’t require a large capital outlay. You can pay for the logistics services you need at a given time and ramp operations up or down quickly and easily, allowing you to scale your logistics operations with no drama.
Outsourcing also provides companies the opportunity to break into new markets without developing logistics operations to service the market. The right 3PL already has knowledge and connections in the new market, allowing them to offer more efficient logistics at a lower cost than most companies would be able to manage themselves.
Outsourcing Provides Flexibility
As logistics needs change, 3PLs can offer flexibility that’s difficult for most companies to come by. This is particularly helpful for companies with seasonal business. By outsourcing their logistics services, they can use the services they need when they need them and back off during slower times of the year.
3PLs also come in handy when it comes to changed plans. They have the resources to adjust quickly and smoothly so your freight can get where it needs to go on time even when the first option doesn’t work out. Many 3PLs including NEWL build contingency plans into more complicated shipments to ensure they’re able to serve their customer.
It Lets Your Team Focus on the Business
Outside of the logistics industry, most business owners don’t set out to run logistics operations. They’ve developed or sourced a product or products that they specialize in, and logistics is a byproduct of getting that product to their end customer, whether that’s another business or the consumer. Managing their products’ trip through the supply chain wasn’t their dream.
When you outsource logistics services or employ a 3PL for comprehensive managed logistics services, your team can focus on your core business. It frees up both the front and back offices, leaving more time and energy for the things your teams do best.
Beyond freeing up people power (and their brain power), outsourcing can free up monetary assets. Utilizing a 3PL helps companies invest their money where it will benefit the business the most rather than sinking it into critical but non-core infrastructure.
Outsourcing to Logistics Providers Often Improves Level of Service
In most businesses, serving the customer well is the most important goal and a managed logistics provider can help companies do that. Logistics experts are better equipped to field customer concerns and resolve problems, taking those tasks off your team’s plate and handing them over to experts.
Once again, the technology that 3PLs bring to the table can make a huge difference in the level of service a company is able to provide to its customers. Cutting-edge 3PL tech can help companies provide their customers with unparalleled visibility, more on-time deliveries, and potentially even lower costs due to reduced shipping costs.
By improving level of service by using a 3PL, your business comes away with happier customers.
Are you wondering how outsourcing your logistics needs could improve your operations? Reach out to our team here to speak with our team about the types of services NEWL provides.