Many small businesses find that the process of order fulfillment is challenging using their own workforce and facilities. The cost of inventory storage may become significant. The variable flow of distribution of products can become difficult to manage. Companies that sell a variety of unique products are even more challenged in their pack and ship process than other merchants that have only one or two items for sale.
In an effort to maximize sales, meet the requirements of demanding customers, streamline the shipping process and increase profits, suppliers often integrate their business with a 3PL (Third Party Logistics) warehouse.
A well-chosen 3PL provides the opportunity for the supplier to remain focused on what they do best, producing product and promoting sales, while minimizing shipping costs. An efficient 3PL warehouse can provide a scalable shipping logistics operation through a proven cost model. As an expert in shipping, a 3PL warehouse can deliver the orders perfectly every time, keeping the supplier’s customers, stores and retailers properly stocked.
A 3PL warehouse often provides a shipping and inventory management solution that helps suppliers operate their companies more efficiently while keeping their customers satisfied. These warehouses offer an experienced workforce skilled in storage, picking, packing, and shipping. They can also reduce inventory costs, which saves expenses every month.
Using a 3PL warehouse service eliminates the need to invest in physical distribution facilities, information networks and logistics assets. Small businesses that have modest volumes of purchase orders and shipping requirements can still take advantage of 3PL warehouse services. However, 3PLs may charge fees or require minimums that are too high to justify the overall costs for some low-volume situations.
Evaluating in-house versus 3PL costs requires examining the actual amount of time spent in the packing and shipping process as well as a full accounting of inventory storage costs.
If a 3PL is chosen, it is important for a small businesses to integrate with their 3PL warehouse in order to maximize inventory and shipping operations while increasing profits. I’ll discuss integration further in another post.Why Outsource to a 3PL? by Steve Brewer