It may seem simplistic, but often the most effective way for manufacturers today to manage their product fulfillment services is to turn the responsibility over to a third party logistics company (3PL). When manufacturers and retailers really assess the work that goes into properly organizing distribution—regulations, volatile costs, customer demands—then they would agree hiring a 3PL is the better way to go.
In addition to 3PLs being able to better manage order fulfillment, there are other more practical reasons that manufacturers should consider hiring 3PLs. We’ll discuss some of the top benefits in this article.
For any business, cost is always at the top of the priority list. Working with a 3PL should cut costs by at least 5%, and up to 25% for those businesses who have their own shipping department. Costs such as payroll and workers compensation are eliminated when hiring on a 3PL. And because 3PLs will even handle the cargo insurance, the risk to the manufacturer also decreases.
Seasonal Order Fulfillment
With Christmas around the corner, most businesses have already ramped up inventory and manpower to handle the rush of the holidays. And with the large percentage of sales that takes place during the holidays, businesses assume this is the right thing to do. But by working with a 3PL, you don’t need to incur these seasonal costs and responsibilities. There is no need to hire additional staff or purchase equipment to handle the demand. 3PLs already have procedures in place to manage the seasonal rush. This prevents any unnecessary firing of additional staff or storing any unused equipment once the new year hits and things begin slowing down.
Manufacturers Still Have Control
Giving 3PLs the kind of autonomy we’ve mentioned may be a bit scary for some manufacturers. However, current technology ensures they always maintain a level of control. The technology allows for all deliveries to be tracked with a communication system should anything go wrong. A good idea is to enter into a seasonal or short term partnership with a 3PL to see just how much they can benefit your business.
Improves Cash Flow
If you sell any kind of physical product, that product will eventually have to be stored. If your business is in charge of its own manufacturing, those storage costs are fixed, whether or not you are using the full capacity of that storage space. Using 3PLs changes that. Your business is now able to manage that storage cost in line with inventory demands. This means costs fluctuate depending on how much product you actually need stored.
More Time for Other Business
In the end, you started your business to provide a quality product to the masses. Your focus should always be on maintaining or improving that product for your consumers, and making sure your business is profitable in doing so. By allowing 3PLs to manage the delivery of these products, you are in turn allowing yourself the time and energy to focus on what you presumably do best. This point alone plays a significant role in helping the success of your business and ensuring your company stays ahead.
APS Fulfillment, Inc., is a specialist in direct mail marketing and warehouse fulfillment and is based in Miami, Florida. We’ve stored, sorted, and delivered products of all shapes and sizes for all kinds of companies. Contact us by phone at 954-582-7450 or by email at [email protected] to learn about more ways third-party warehousing and fulfillment services can support and grow your business.