Choosing a third-party logistics (3PL) partner is no small task, especially since they’ll have an influence on how smoothly your supply chain runs, and how satisfied your customers are. When making a decision on which 3PL company to entrust your supply chain with, there are two types you must consider: asset-based 3PL companies, and non-asset based 3PL companies. Of course, there are pros and cons to each type of 3PL provider, and each company’s choice depends on their specific needs and situation. To learn more about asset-based vs. non-asset based 3PLs, and to figure out which one is right for you, keep on reading.
What Are Asset-Based 3PLs?
Asset-based 3PLs are logistics companies that own some or all of the operations needed to run a client’s complete supply chain—this can include transport trucks, distribution centers, warehouse spaces, and more. If you’re considering partnering up with an asset-based 3PL, then be sure to ask for documentation or other evidence that they`ve used their assets to effectively cut costs for previous and current clients. Even though some companies own all of their assets, it doesn’t necessarily mean that they’re able to cut costs and be more affordable than those who don’t. A well-established asset-based 3PL should be able to provide you with whatever documentation or proof you require to learn about their strengths and weaknesses, and whether their own supply chain has been able to offer affordable solutions for clients in the past.
One potential disadvantage that you may run into when dealing with an asset-based 3PL is that they’re obligated to use their own assets when creating a plan to get your products from point A to point B. They’ve made great investments in creating their own internal supply chain, and won’t be bothered to re-route your supply needs using external assets, regardless of whether it’ll be faster or cheaper for you. Your business may miss out on cheaper and more efficient alternatives since asset-based 3PLs want to realize the benefits of their own assets and turn a better profit for themselves—however, that’s just one of the risks you take when associating yourself with them.
What Are Non-Asset Based 3PLs?
A non-asset based 3PL refers to logistics firms that don’t own any of the assets necessary to facilitate a supply chain. So, how do these providers get the job done? Instead of investing in trucks, warehouse, and distribution centers of their own, these companies instead negotiate contracts with owners of these assets, and offer to manage them at the lowest possible cost for your business. While some may perceive this as being more inefficient than asset-based 3PLs, non-asset based firms can actually offer clients a higher degree of flexibility, which can make a world of different in the logistics industry. Since non-asset based 3PLs aren’t obligated to using their own assets to help improve the return on their investment, they’re more likely to offer more flexibility when it comes to options for your supply chain.
While flexibility in organizing your supply chain is important, it’s even more important that you really communicate your vision and goals to a non-asset 3PL you plan on partnering up with. Because they’ll have so much liberty in choosing who houses and transports your products, you’ll want to make sure that your visions align, and that you’re both on the same page. Once you’re able to establish a transparent and efficient logistics system, you can focus on your core duties while your 3PL takes care of the rest.
The Difference Between Asset-Based and Non-Asset Based 3PL Providers
The main difference between asset and non-asset based 3PLs are that the first option owns the assets of a complete supply chain, while the other contracts those assets from other people. If you’re still not sure how this plays into your decision, take a look at the main factors of each to decide which are more important to you.
Asset-Based vs. Non-Asset Based 3PL Providers: How to Choose One?
Asset-based companies have their own equipment and operations, which means that they’ll likely face less challenges when it comes to providing you with the service you need. On the other hand, non-asset companies have freer will and flexibility to meet your specific needs. This category really depends on your specific needs to determine which would be more beneficial.
Asset-based 3PLs tend to market themselves as more stable, since they’ve invested in their future and are highly unlikely to just close up shop one day and leave you hanging. It’s true that non-asset 3PLs are more likely to close down due to financial mismanagement or industry pressures, but once you do your research and are satisfied with the track record and reputation, asset 3PLs only have a minor advantage in this category.
Since asset-based companies are tethered to using their own assets and won’t explore any other options, non-asset companies win in the cost category. They can use their extensive network to meet your supply chain needs, and tailor services as needed to keep things cost-effective.
By choosing APS Fulfillment, Inc. to be your 3PL partner, you’ll be able to save money and time by eliminating the need to set up your own warehouse and distribution system, and you’ll also be able to scale your fulfillment services depending on the growth of your business. Fast and dependable fulfillment services is integral to maintaining a good rapport with customers, which is why you should trust APS—we take the extra care to ensure your customers receive their packages on time, and in good condition. Contact us today to learn more about how we can help your small business continue to grow.
Photo Credit: iStock.com/shironosov