How 3PL companies help in cost cutting?
3PL companies with their highly developed processes and critical infrastructures in place can help one manage the rising logistics cost. With rising inventory, transportation and logistics costs, it is no longer feasible for companies to carry out supply chain activities in-house. Let us take a look at how these service providers help in cost cutting:
1. No In-House Investment
Pouring out money in non-core competency areas can prove to be a financial lockdown. Moreover, building an in-house large supply chain management department can only add to the existing pressure of business.
2. Flexible Service Options
A 3PL offers the client to choose from customised service packages which are designed as per their individual needs and requirements. One can expect to receive the exactly desired service at best available and suited tariff.
3. Process Improvement
Standardized procedures which have been developed with years of experience promised minimal wastage and reduced to nil errors. Moreover, these 3PL companies adopt a continuous improvement methodology to ensure just-in-time services. Continuous measurement, expert evaluation, and corrective actions add to the quality of supply chain management.
4. Shared Space
Companies can gain from significant savings in a lease or rental expenditure by making use of multiple-client shared-space warehouses offered by 3PLs. All operating, labor and other miscellaneous costs are shared by multiple companies, thus diminishing the cost burden.
5. Latest Technology
A 3PL who regularly invests in advanced technological equipment can prove to be a beneficial service provider. Outsourcing services to such a provider open access to advanced technology without having to bear the associated overhead investment. Moreover, use of cutting-edge automation systems, inventory management systems and material handling machines can significantly reduce order processing time and speed up the finished goods process.
6. Transport Management
Experienced 3PLs evaluate alternative transportation modes, consolidate shipments, adjust package design to increase freight density and much more to cut down the transportation costs by a sizeable figure. These service providers are experts in their field and are updated with all the market information that might prove to be a cost-reducing factor, whether it is changing tariffs or regulations.