In supply chain management and logistics, 3P logistics is the use of third-party companies to outsource certain elements of its logistics, warehousing, and production support services. 3P logistics outsourcing services offer the advantages of a fully dedicated staff for running the logistical processes.
When you outsource the physical distribution and warehousing functions of your business, you are effectively “outsourcing” the cost of maintaining in-house personnel. Third-party logistics services offer a cost-effective solution for streamlining certain business processes, such as inventory, production planning, order tracking, and order processing, thereby allowing your company to save on overhead costs.
When you outsource logistics services from a third-party provider, you can be assured that only the best freight and shipping providers will be used for the task at hand. These providers have extensive experience in procuring and distributing goods, including air freight and sea shipping.
When you contract with a logistics provider, you get to keep the service cost and implementation details at a bare minimum. You also get to concentrate on making your customers satisfied with the products that you’re selling.
Many logistics activities can directly or indirectly help increase your customer base. For instance, if you outsource vehicle movement, you will immediately expand your customer base as the trucks carrying the goods cross state or even country borders.
A logistics provider can also help you streamline warehousing operations. This means that your third-party logistics provider can take charge of the day-to-day warehousing requirements of your company.
If you hire other transport service providers, you’ll have to pay for their services. The good news is that there are third-party logistics services that will do all the transportation tasks for you.
Expand your supply chain. There are many reasons why you may want to outsource the supply chain of your business. Perhaps you’re too busy to handle it yourself or perhaps you have a specific project that requires attention only seasoned third-party logistics companies can provide.
Reduce your risk. With just one provider, you can be assured that your goods will be delivered on time and intact. Your clients won’t worry about losing or mishandling your goods, and you can focus more on your clients.
Build better customer relationships. When you have efficient transportation services, you can give your clients more value-added services. For example, you can add on special services, like free shipping and insurance, when you transport your products to your clients.
You can increase the efficiency of your business by avoiding delays in delivery. You can also avoid extra fees from courier companies by including their insurance and freight forwarders in the transportation services you provide to your clients.