The selection of a third party logistics (3PL) provider is a highly strategic decision that can significantly impact your business' ability to succeed and scale. Companies with an eye on growth will likely require the input of a capable partner to:
- Manage their warehouse inventory with flexible storage options
- Coordinate picking, packing and shipping practices
- Navigate complex demand forecasting
- Manage returns/reverse logistics
In addition, business owners will want a partner that performs these duties while keeping carrying costs low. Luckily, these options are more than just a pipe dream; the following article details the elements of scaling with a 3PL, providing an overview of how their general offerings compare with a DIY approach.
Scaling with a 3PL vs without a 3PL |
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| Category | With 3PL | Without 3PL | ||
| Inventory | ✅ | ❌ | ||
| Pre-existing fulfillment network allows for quick and easy inventory scaling | Limited due to self-reliance on self-managed warehouses | |||
| Fulfillment speed | ✅ | ❌ | ||
| Standardized picking, packing and shipping practices result in faster fulfillment | In-house management results in slower deliveries | |||
| Cost efficiency | ✅ | ❌ | ||
| Economies of scale and minimal upfront capital requirements result in lower overall costs | Warehousing, staffing and tech all result in high associated costs | |||
| Omnichannel capability | ✅ | ❌ | ||
| Immediate omnichannel infrastructure designed for rapid scaling | Requires heavy infrastructure and personnel investment; slow growth | |||
| OMS/WMS | ✅ | ❌ | ||
| Immediate access to industry-leading software designed to optimize order and warehouse management | Requires investment in software development, plus ongoing maintenance | |||
Why should you consider scaling with a 3PL?
3PLs provide companies looking to scale up their operations quickly with solutions designed to meet clients’ material, technological and personnel needs. These services provide clients with the choice of managing their own fulfillment or working through contract logistics, in which their staff takes over every aspect of the fulfillment process.
The following sections provide an overview of how scaling with a 3PL affects the different areas of your company.
Geographic expansion support
3PLs provide companies with extensive material scaling support to meet the demands of their customers. These options include a flexible infrastructure designed to expand and contract with the needs of the client. This includes:
- Omnichannel support: Scaling with a 3PL means having the ability to handle fulfillment through multiple channels at once, shortening delivery times while improving inventory management across warehouses.
- Extensive warehouse networks: 3PLs provide clients with access to a nationwide network of warehouses that greatly improves coverage and optimizes shipping speed.
- Transportation resources: 3PLs coordinate more than just the warehouse; their physical infrastructure should also include a coordinated transportation network, as well as transportation management software to manage it across fulfillment centers.
Technological Expansion
Scaling with a 3PL provides clients with a fulfillment software suite that optimizes the fulfillment process. These solutions target every stage of fulfillment, including:
Industry-leading options go beyond just logistics, providing optional add-on services for marketplace management and feed marketing to help companies advertise products while also handling their fulfillment. These separate software platforms provide business leaders with an end-to-end solution that allows for more effective inventory management by bringing multiple departments under a single roof.
Trained logistics experts
Working with a 3PL goes beyond just fulfillment; industry-leading platforms also provide experts that act as advisor and advocate for clients in need of additional personnel assistance. Just a few of the specialists that a 3PL can provide includes:
- Supply chain analysts
- Warehouse managers
- Technology & systems specialists
- Transportation & freight management specialists
- Compliance & regulatory experts
- Customer experience & client success managers
In the case of smaller businesses and startups, the services of these professionals allow a company to scale up without the excessive bloat of paying salaries and benefits. In effect, scaling with a 3PL through contract logistics allows a company to remain lean and competitive at the same time.
How to select a 3PL
There’s little question that scaling with a 3PL provides business owners with a more efficient and cost effective means to expand operations, but there is still the question of which one to use. The following table provides a generalized overview of what to look for when considering your options:
Scaling with a 3PL: Your best option |
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| Category | Good | Better | Best |
|
Omnichannel capability |
Limited D2C/eCommerce support |
D2C + retail with some options for B2B fulfillment |
D2C, B2B, retail and wholesale fulfillment integration |
|
Contract logistics |
Warehousing & fulfillment support |
Customizable logistics & transportation support |
Fully-tailored support with value-added services |
|
Physical infrastructure |
Regional warehouse coverage with limited facility footprint |
National warehouse storage |
Nationwide fulfillment center coverage |
|
Operational flexibility |
Limited capacity for seasonal volume spikes |
Seasonal support with limited additional scalability |
Highly adaptable fulfillment infrastructure that responds to real-time demand |
|
Customization & branding options |
Limited to generic packaging options |
Limited customization to accommodate for branding |
Fully customizable packaging, including inserts and branded fulfillment |
As a final note, we recommend taking a close look at your company’s goals. Are you looking to improve fulfillment speed? Accuracy? Customization? These goals should be discussed at length with a prospective 3PL to ensure that they can handle your scaling needs—not only now but also in the future as your company continues to grow.
Still have questions?
Ask us! We talk to a lot of business owners who are unsure of the limited flexibility and lack of transparency with their own 3PL. If you are concerned that you are not getting the support you need, speak with one of our experts to see how scaling with a 3PL capable of providing it can transform your fulfillment process.
