WHEN TO CONSIDER OUTSOURCING DISTRIBUTION TO A 3PL
Third party logistics providers have been around for decades and have evolved significantly since they first emerged on the scene as public warehouses-places where companies could store pallets and goods and retrieve them when they needed them. Today, modern 3PL providers offer a host of distribution services including outbound order fulfillment, piece picking and packing, custom labeling, kitting, light manufacturing, and many other value-added services. So why should companies consider using a 3PL provider?
A 3PL provider may be worth considering for companies that have an unpredictable growth model. Companies that are considering on adding a distribution center for the purpose of expanding their sales reach into a new geographic area. Companies that wish to focus their expertise and talent in areas such as product development and sales and marketing and would like to leave the business of distribution in the hands of trained professionals. Some new businesses may not wish to devote time and energy to operating their own distribution center. Furthermore, they may simply be too small to have the economies of scale to profitably manage distribution. For companies too small to meet this minimum threshold, a 3PL provider may be a good solution. 3PL companies that are interested in working with startup companies will likely have a minimum monthly charge which should be determined upfront and factored into the cost model.
Whatever a company’s situation is it may make sense to at least investigate the feasibility of outsourcing given the rapid advancements that many 3PL providers have made in recent years and the numerous new services offered by such companies.
Posted: 5/11/2015 Sourced by: DCVelocity