Today more than ever, logistics and supply chain management have become vital keys to a successful ecommerce business. With the rise of Amazon Prime, same-day delivery, and other expedited shipping methods, fulfillment convenience and efficiency are what consumers expect. Combine this with the widespread supply chain disruptions due to COVID, and other issues in recent years, and the need to deliver your products both on time and with accuracy has only heightened.
So where does this leave ecommerce companies like yours? To stay competitive and keep up with growing consumer demand online, many companies are looking to outsource their supply chain and logistics needs to third parties. While there are many benefits to outsourcing, is it the right decision for you?
Defining 3PLs: What is logistics outsourcing?
Third-party logistics, or supply chain outsourcing, can cover a variety of ecommerce functions for your company. Supply chain outsourcing can include transportation vehicles, domestic and international shipping, distribution centers, inventory management, logistics software, packaging, and more. Companies can outsource their entire logistics to 3PLs, or just certain aspects.
When it comes to supply chain and logistics outsourcing, you’re hiring a company outside your organization to handle inventory, shipping, or fulfillment needs. These outsourced organizations are often called 3PLs, or third-party logistics providers.
As you explore the potential for ecommerce outsourcing for supply chain and logistics operations in your own company, you must weigh the pros and cons.
The Pros of Logistics Outsourcing
Spending More Time On Your Business
As your ecommerce business grows, you can expect your supply chain and logistics needs will grow as well. These needs require increased time and attention that you may not have. Therefore, one of the main benefits of outsourcing is the extra time that is freed up to focus on your business. You can devote this additional time to amplifying your business’s strengths, boosting your marketing, and addressing other needs that have critical importance, but may have been put on hold.
Reduced Costs
When you partner with a 3PL for your logistics or supply chain outsourcing needs, you have the potential to reduce your costs. Your 3PL’s expertise should better optimize your supply chain and logistics operations at lower costs with greater efficiency (and often better technology). Plus, supply chain outsourcing also prevents you from needing to hire additional employees to manage your supply chain and logistics from within your organization.
Increased Customer Satisfaction
We’ve already discussed the growing consumer demand for fast, accurate shipping. When you outsource this responsibility to a quality 3PL, you can trust their expertise and resources to get the job done right and meet these essential consumer demands.
With your customer’s shipping needs met, their satisfaction with (and loyalty to) your brand will grow. So when scaling your business, you can know that your 3PL can keep up with your logistics needs.
The Cons of Logistics Outsourcing
Compromised Quality and Misalignment
It’s essential to have logistics outsourcing alignment with your 3PL. Some 3PLs may not have the expertise to serve your industry. As a result of this misalignment, the quality of your operations (and your product or service) may suffer due to inadequate materials, unskilled workforce, higher costs, or even supply chain disruptions.
Loss of Control
Once you turn over the keys to your supply chain to a 3PL, it’s not easy to take back control if something goes wrong. When your ecommerce outsourcing isn’t managed correctly, it impacts your company’s bottom line, and your reputation can also take a hit. This means your customers will blame you, not your 3PL, if their order is mishandled or doesn’t come in on time.
Integration Challenges
Ideally, you want your 3PL to integrate seamlessly into your current systems and processes. However, some 3PLs may not have that capability and require you to adapt your systems into theirs. This especially applies to technology integration, where real-time data is needed to manage your supply chain outsourcing. You and your 3PL may face challenges finding a system that works well for both sides.
Partner with a Logistics Outsourcing Expert You Can Trust
It’s clear there are worthwhile benefits to outsourcing your ecommerce logistics and supply chain operations. However, partnering with the right 3PL is vital to making it work for your organization. Thankfully at Smart Warehousing, we’re experts at effectively managing your ecommerce supply chain and logistics needs. With our innovative technology, decades of industry experience, and personalized fulfillment solutions, trusting us with your logistics outsourcing is the right decision. Request a quote from us today to get started.