Smart Warehousing Mar 11, 2022 12:30:00 PM 10 min read

5 Reasons Why Using a 3PL is Cost Effective

As your organization grows, so does the complexity of your warehousing, transportation and logistics operations. While it makes sense to handle many aspects of your business in-house, when it comes to the operational and logistics aspect, choosing a 3PL partner with the expertise to optimize your supply chain can provide great value and help your bottom line.

Can a state-of-the-art 3PL be cost effective for your business? You’ve likely seen fulfillment partners with outrageous order minimums and segmented fulfillment channels. Of course, that would make it look like you’re better off on your own.

But before you embark on the enormous expenditure of securing your own warehouse space, we need to set things straight. In an integral supply chain, 3PLs can be part of a cost-effective logistics solution. The right 3PL partner can help your business stay lean and efficient — and even save costs.

Take a look at how using a 3PL can be a valuable, cost-effective strategy to meet your consumers’ demands.

 

Minimize Costs with a “One-Stop Shop”

Looking for a fulfillment partner to handle all your business needs can be challenging. Too many 3PLs can fulfill ecommerce orders or retail orders, but rarely both. When you’re forced to spread inventory across multiple partners and manage all the strategy of that yourself, you’re out time and money that you’d rather spend elsewhere. It’s extra logistics legwork, and every step of the process adds up.
3PLs can be extremely cost effective because you can take advantage of the “one-stop shop” services they offer. The entire logistics process can be streamlined with omnichannel fulfillment that consolidates numerous 3PLs into one trustworthy partner. With a one stop shop, your business can seamlessly track inventory for all products across the country and manage consistent relationship development with a trusted customer support associate for every order. You can forget out of control order minimums. With a consolidated 3PL partnership, you get consistent monthly order minimums that make it easy to assess your fit. Plus, you can wrap it all up with seamless technology that provides insight into inventory, real-time order status, transportation information, and reporting.

For these reasons and more, a consolidated 3PL makes a lot of sense when it comes to cost effectiveness and shipping efficiency.

 

Shipping Costs Slip with Zone Skipping

With 3PLs, you can harness the power of zone skipping to benefit both your bottom line and your timeline. When your 3PL has a network of warehouses across the country, it puts your product closer to your customer, sometimes even in their backyard. By having your product closer to your customer, you save on shipping because your product travels through less zones. Whether shipping small parcels or LTL shipments, businesses can combine orders into one regional location delivery. Local carriers meet to make the final destination delivery and the deal is done at a fraction of the cost: with zone skipping, you can utilize one truckload for multiple same region deliveries.
Now, compare zone skipping fees to the pricing structure of traditional mail and delivery carriers. The cost can rise exponentially with these traditional mail carriers, especially when it comes to delivery speed. In addition, shipping in peak shopping seasons can result in further delays with overtaxed mail carriers.

It’s a win-win when your organization can decrease overall shipping costs to consumers AND meet 2-day delivery expectations for nearly every order. That’s why it pays (literally) to leverage your transportation capabilities and get products closer to the end consumer.

 

Lower Overhead through Cost Sharing

Getting a warehouse of your own also involves taking on a lot more overhead. These fees can add up when it comes to staffing, maintenance and technology. Using a 3PL can help your organization stay lean through cost sharing.

3PL operations are designed to maximize efficiency with warehouse employees who offer their services without your company going through the time-consuming and troublesome task of hiring additional staff. From labor management to security and on-site customer support, the cost effectiveness of a 3PL starts to make more and more sense. The beauty of cost sharing means the human capital, utility costs and more aren’t solely on one business, but on multiple.

In addition to the warehouses themselves is the technology. An ideal 3PL will offer automation software with real-time insight into order fulfillment. Access to this kind of data can help your team evaluate trends, savings and even warning signs throughout the product journey. You can also get access to warehouse technology that could be too expensive for one singular business to afford. Things such as pallet scanners or dry ice makers can be a real gamechanger when it comes to automating your process. Using a 3PL and their warehouse technology system can be a strategic and cost-effective option. Little things easily can add up when creating your own warehouse, but are efficient and effective for a 3PL.

 

Leveraging Locations to Maximize Efficiency

Having your own warehouse can be limiting from a location standpoint. At Smart Warehousing, we offer businesses more than 30 warehouses spread throughout the nation to make offering two day shipping a reality for organizations from coast to coast. It’s safe to say that utilizing a 3PL’s 30+ locations is more cost-effective than operating 30 of your own.

E-commerce shoppers expect fast and convenient shipping. Meeting these expectations is key to making sales and growing a customer base. Slow shipping can too quickly lead to bad reviews and lost customers. While sluggish shipping may not be your brand’s fault, your reputation is still on the line. With numerous warehouse locations to speed up shipping, a 3PL can help more than your ROI m: this can help maintain your strong reputation and strong customer experience.

At Smart Warehousing, we’re proud to own our own dry ice maker for perfect temperature control. This helps us ensure that food products stay cold or frozen in transit and inventory. We also employ a strategic first-expired, first-out methodology to prevent the 40% of food loss that happens at the supply chain level. Fulfilling lot control orders based on expiration date can save businesses from losing nearly half of their inventory.

With no worries of product spoiling or melting, your operations team can breathe easy. These issues cost money and customer satisfaction and that’s not a price most places want to pay. Being able to instantly offer shipping from numerous warehouses is a boost you won’t want to miss.

 

Access Expertise During Crises

At Smart Warehousing, it’s our job to bring the 3PL expertise that will help our customers navigate supply chain crises. There can be a myriad of causes for global shipping crises, including raw material shortages, factory closures or furloughs, too few truck drivers on the road, port congestion, high demand for air shipping, inadequate infrastructure and much more. But the cause doesn’t matter when it’s your business on the line. A 3PL is cost effective because of their expertise. A 3PL has vast industry and logistics knowledge, which is incredibly valuable in a time of crisis.

Smart Replenishment is one way we help businesses get things done in a crisis. By managing your inventory, we ensure you meet customer demands. We look at your customer base, review your shipment profile and optimize inventory through our warehouse network for one to two day ground shipping. We also have an ideal rail yard right in middle-of-the-country in Kansas City. Product can travel within two and a half days from one coast to the Midwest, which makes operations more efficient for you. When the supply chain is stalled elsewhere, this rail system can be a saving grace. In a supply chain crisis, you have the opportunity to leverage the network, infrastructure, technology and transportation relationships of your 3PL.

At Smart Warehousing, we provide all that and more. Want to see how an omnichannel 3PL could be cost effective for your business? Take a look at the industry leading 3PL logistics services we offer at Smart Warehousing.