Why Use a Third Party Logistics Provider?

Why Use a Third Party Logistics Provider?

A lot of people ask us the question “Why use a 3PL?”

And it’s not just our customers asking us — whenever I explain what I do to friends or family members, they often have the same question. They’re curious because, in their minds, logistics is something that a company would normally handle itself, right?

Well, perhaps it used to be that way, but it’s not 1950 anymore. With increasingly more complicated global supply chains becoming the norm, requiring a higher level of knowledge and an increased level of specialization for the average logistics expert, doing logistics in-house just isn’t as simple as it used to be.

So here are a few reasons why we recommend using a 3PL — and I want to note that this doesn’t just apply to large companies or transnational corporations. Even very small businesses can benefit from the services of a quality 3PL.

Why Use a 3PL? First, You Don’t Have to Invest in Infrastructure

One of the heaviest costs that a business has to bear is infrastructure. These costs are generally inflexible, which is fine as long as you need the infrastructure constantly. Warehouses especially can be incredibly expensive to maintain, and they can represent a huge upfront cost.

If you’re entering a new market and have no choice but to locate a warehouse or facility in the area, you suddenly have a big investment in this new market that must be recouped (along with the maintenance and upkeep costs just to keep the thing running).

However, there’s another cost that’s often forgotten in the rush to open a new facility — staffing. Even if you plan to have structured layoffs to keep costs down, no one wants to be the one to let everyone know their jobs are gone for three months or six months (or longer).

Hiring a 3PL lets you avoid all of this. Not only do they already have the infrastructure and staff in place, which helps you scale and enter a market much more quickly, but this also allows you to scale down much more quickly.

This is especially useful if you deal with a lot of seasonal overflow. You can scale up quickly, pay a higher fee for a few months until your additional orders drop back down to normal, and then you can reduce what you pay your 3PL without having to lay anyone off or pay for a half-empty, half-staffed warehouse.

Why Use a 3PL? It Costs Less Than Building the Chain Yourself

Although I alluded to it above, the second big reason to hire a 3PL is to avoid having to build your entire supply chain yourself.

Now, some businesses like to do this. They get this idea in their head that their supply chain is only truly visible and manageable if they are 100% in control of it themselves.

The truth is, your supply chain visibility is probably higher with a 3PL than if you were to manage your supply chain yourself. 3PLs have a vested interest in making it as easy for you to monitor all aspects of your supply chain whenever and however you’d like.

But more than all this, the main reason to use a 3PL is the access you get to trained experts, existing infrastructure, and the latest logistics technology.

Sure, you can build all this stuff yourself — you can find the experts, invest in the equipment and technology, and implement the high-end software — but is that investment going to pay off?

More often than not, running your supply chain yourself can only be done well by multinational corporations — and even they have trouble with it. It just costs too much, and keeping up with technology and staffing costs can be crippling, especially for companies who are trying to compete on price.

Save Money While Still Accessing a Wealth of Technology, Infrastructure, Equipment, and Expertise

Many companies find that they actually save money by hiring a 3PL provider. By hiring a 3PL, someone whose success is built on being a logistics expert and having the latest technology integrated into their existing infrastructure, you gain access to top-of-the-line technology, equipment, and infrastructure without having to invest in maintenance or regular upgrades.

But, perhaps even more importantly, you get access to an expert, a team who isn’t just familiar with your supply chain, but a team whose success depends on understanding a wide variety of logistics problems and their unique solutions.

Accessing such a team by hiring a 3PL costs much less than staffing such a team directly and providing for their ongoing education. Such a team will also have a much more diverse array of experiences, giving them deeper insight into unique solutions to your supply chain needs.

Companies have been outsourcing their logistics operations for decades because they see the value in working with a 3PL. Keeping things in-house just doesn’t make sense in the majority of cases.

Partner With a 3PL Who Will Manage Your Supply Chain Effectively (While Saving You Time and Money)

3PLs only profit if they continually get your business — if they fail, they get fired, which means they have a powerful interest in not just managing your supply chain, but in actually saving you money and increasing your efficiency.

We’d love to be the partner you need to reduce your costs and increase your profit margins (or even just reduce costs for your customers and increase your competitive edge).

What Can DTS Do For You?

Whether you're a company looking to improve one facet of your supply chain, your entire supply chain, or simply looking for a transportation and logistics consultation, we can help.

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