3PL to Benefit Multichannel Business with Improved Control and Cost Efficiency

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Globalization, evolution of e-commerce, and focus of manufacturers on core competencies are among few reasons for employing third party logistics (3PL) companies for efficient operation. Owing to fierce competition, manufacturers are hiring logistics providers for improving internal and external fulfillment operations. The expertise provided by 3PL companies helps businesses to increase productivity of their supply chain models in terms of reliability and cost. A report published by Allied Market Research on 3PL market highlights changing trends and precise statistics on various segments of the industry. As per the report, the third party logistics market is expected to register a CAGR of 5.16% from 2016 to 2022. Various technologies have implemented that benefits multichannel businesses to streamline processes and enhance operability.

Benefits of employing 3PL companies to enhance profitability:

Managerial and information technology expertise assist multichannel companies to operate efficiently. It offers following benefits:

Improved productivity

Businesses can focus on marketing, analysis, merchandising, and other operation without concerning about transportation and fulfilment. Furthermore, processing customer orders during peak times is possible without the need to have greater internal capacity and employing additional staff. Service providers have warehouses and distribution facilities located at various locations to ensure lower overhead and minimum delivery time.

Cost efficiency

3PL companies can offer lower cost per order as compared to internally managed logistic operations. It also helps companies to save shipping costs by implementing multichannel distribution strategy. Furthermore, lower capital investment is required to cater the entire supply chain. It eliminates the need to employ staff, invest in technology, and saves warehouse space. It also saves time & resources by letting businesses on their core strategies instead of billings, audits, staffing, and optimization.

Improved control and better information

3PL companies employ best practices in industry and stay updates on development in technology to serve their clients better. Distribution across the world is achieved in minimal time as they have better awareness about international policies and regulations. The technologically advanced software offers inventory management solutions and monitors the entire process. Reporting the distinct data by integration of supply chain and transport modes is carried out using software operated by skilled professionals. Businesses can get better control by tracking their shipments and communicating with suppliers across the boundaries.

Technology trends in logistics:

Various technologies are implemented to improve fulfillment process for cost-effective and security benefits. Some of the trends in technologies are as follows:

Usage of RFID & Bluetooth

RFID tags have become ubiquitous with the exponential decrease in its cost in recent years. 3PL providers are using it for tracking shipments, reporting distinct data, and improving efficiency. Automatic identification and data capture technology provides real-time updates and data as shipment moves along the process with the help of handheld scanners. Furthermore, low cost and low energy consuming Bluetooth devices helps in tracking and processing of shipments and improves accountability in logistics operations.

Evolution of e-commerce

3PL industry is growing rapidly with an evolution of e-commerce as businesses are focusing on delivering their services and products to customers in minimal time. As competition in e-commerce sector is fierce, logistics providers play a vital role in helping businesses to thrive. In addition, usage of cloud based platforms has been essential for 3PL providers to expand their consumer base. Cloud also helps them by making the entire logistics process cost-effective and enables faster data processing & analysis.

Companies getting recognized for 3PL services:

Logistics providers are focusing on developing innovative solutions to simplify complex supply chain and logistics processes arising due to globalization. These top 100 companies achieved excellence by innovation in logistic operations and delivered solutions to optimize business processes. Inbound Logistics magazine selected Werner Logistics as a 2016 Top 100 3PL Provider. The company was selected for its capabilities to fulfill unique supply chain and logistic demands of customers. Werner Logistics, the logistic business unit of Werner Enterprises is a premier transportation and logistics provider, founded Nebraska, U.S. in 1956. Matt Parry, senior vice president of Werner Logistics said, “As market innovators in all our logistics services, Werner Logistics is proud to be named a 2016 Top 100 3PL Provider. We believe this reflects our commitment to offering world-class logistics solutions to address many of the challenges our customers face.” Holman Distribution was also included in the list of top 100 providers for the first time in company’s 152 years old history. As the industry grows, companies providing innovative solutions to reduce turnaround time with lower cost will thrive in the long run.

Ranjan Singh Research Analyst at Allied Market Research Ranjan has over 4 years of experience in market research and consulting across multiple domains which include technology, FMCG and durable consumer goods, heavy machinery, and automotive. He has hands on expertise in predictive and exploratory research projects for studying regional and global demand potential, market estimation & forecast, perceptions; analyzing macro and micro markets in terms of key gaps and opportunities. Ranjan is part of multiple consulting as well as syndicated report assignments and is actively involved in all the stages of project completion from planning, execution to delivery as per clients satisfaction.

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