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The top reasons for logistics outsourcing include cost savings

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Top Reasons for Logistics Outsourcing - Different types of transportation
Steve Thompson
Steve Thompson
May 28, 2021

Logistics is a completely different world from a manufacturing plant. Many companies that make products prefer to focus on their designs and marketing and let logistics specialists handle warehousing and distribution of products. Contracting with experts can be an efficient business model. Here are core reasons for logistics outsourcing you should consider.

1. Reduce Risks

Various risks affect all businesses, particularly producers that manufacture products. Sometimes it's difficult for even large companies to handle all the responsibilities and complexities that go along with transportation and storage. Outsourcing to an experienced firm that builds its reputation on performance in accurate on-time deliveries reduces many burdens your company may not be well-equipped to handle.

2. Improve Efficiency

Logistic workers using a tablet

Not all manufacturers have modernized their warehousing or distribution services. But outsourcing to a logistics firm that utilizes the latest smart technology can help your company evolve more quickly. These days consumers expect speedy deliveries and third-party logistics (3PL) firms have risen to this challenge. Seasoned 3PLs understand how to reduce waste in warehouse environments to make them more eco-friendly, which helps improve the bottom line. The most technologically advanced 3PLs understand how to cut shipping costs and streamline the distribution process.

3. Boost Customer Loyalty

Customer satisfaction has become a major focal point for many brands, especially those that allow consumers to order products online. These days consumers have much higher expectations of products arriving at their door or at a pickup site on time. People can now track delivery vehicles and get clear up-to-the-minute estimates on arrival times. Same-day and next-day delivery services have become common in recent years, rising customer expectations further. These are all areas in which the right 3PL can make a huge difference.

4. Tap Into New Technology

IoT technology is boosting the quality of logistics in various ways. When RFID chips are installed in an electronic monitoring device the data can be sent to a central database. The analytics can then be studied to figure ways for making deliveries more efficient. IoT sensors can be placed in products and vehicles to monitor where goods are in the supply chain from the manufacturer to the distributor to the retailer. Real-time inventory monitoring has contributed to more accurate and efficient warehousing.

5. Expand Your Circle of Experts

When you outsource to a reputable 3PL, you are getting more than people who know how to do work your company would rather not do. The logistics firm you choose should have enough valuable expertise to advise you on improving elements of your operation. A 3PL can pick up useful information from other suppliers or even consumers to share that might give you a competitive edge.

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6. Provide a Scalable Solution for Growth

As your business grows, you will need more space to store your products. Your 3PL can help guide you toward scalable solutions that reflect your company's productivity. The more your customer list grows, the more convenient it becomes to outsource to a firm that has the ability to do low volume or high volume deliveries. It helps enormously to contract with a flexible company that adjusts routing and delivery schedules to meet demand efficiently.

7. Improve Accountability and Transparency

Your company can establish accountability and transparency through a reputable 3PL that tracks every move of a product's journey through the supply chain. You'll be able to explain delays more clearly to employees and customers because your company will be interconnected with the 3PL in real-time. Inventory will be more accurate in warehouses, which will help reduce the risks of stolen items within the supply chain.

8. Create a More Comfortable Environment

One way to lower the stress level of a manufacturing company is to let a reliable logistics firm take care of warehousing and distribution. Shippers have to work at a fast pace to ensure deliveries get to their destinations on time. Many little things can go wrong in a warehouse or with countless delivery drivers, which is why many manufacturers hire 3PLs as logistics specialists. It gives managers peace of mind that they have much less to worry about.

9. Cut Capital Costs

Diagram with arrows going up for Quality, Speed and Efficiency, while Costs are down

Instead of investing in giant warehouses and a fleet of vehicles, a producer can cut costs in these areas by outsourcing. The cost of running such operations can be volatile when energy prices spike out of control. Manufacturers shifting to outsourced logistics can save space and reallocate it for other purposes.

10. Less Strain on the Environment

Many 3PLs are committed to eco-friendly solutions, a benefit their clients can promote. Going green is a popular sentiment, which competitive 3PLs understand. Part of the challenge in supply chains is moving material in the most cost-efficient way possible while causing the least impact on the environment. In the future, many transportation companies will invest in electric trucks simply because it will cut emissions and costs.

Conclusion

These essential reasons for logistics outsourcing point to making your operation run more smoothly, especially if you want to devote most of your attention and resources to product development and marketing. If you’re looking for pallets for sale to help you organize your warehousing and distribution operation anywhere in Southern California, contact the pallet experts at Pallet Market today.