Simply, The use of third party logistics, or 3PL, means a
substantial cost savings to companies who would ordinarily have to lease or
otherwise contract these services.
3PL typically specialized in integrated operation,
warehousing and transportation services that can be scaled and customized to
customer needs.
Many companies are deviating from having their own warehouses
and transportation services to that of contracting with various services
providers such as UPS (United Parcel Service).
For many companies, contracting with services providers is
easier and cheaper than doing the work themselves. After all, they don't have
to worry about storage, transportation, or distribution of the material. With a
phone call to the 3PL company, they arrange for the material to be shipped to
their customer or they pre-arrange a schedule for a specified amount of product
to be released to the customer on certain days of the week or month. They don't
even have to call a trucking company, since most of 3PL have their own fleet of
trucks for transportation of goods.
The $100 billion 3PL market has experienced dramatic growth
of approximately 15% per year over the last decade and shows no signs of
slowing down. statistics shows that 42% of shippers are currently planning to
switch to 3PL; 17% because of cost, 25% because of services (saving time and
money) Many experts within the industry have observed that only 10% of
logistics services are currently outsourced in the U.S. and believe that the
U.S. will transition to a model more similar to that of European countries, where
approximately 40% of logistics services are outsourced to 3PL service providers.
3PL service providers will propel growth into the future.
More companies are choosing to contract services with 3PL
Company, so they don't have to concern themselves with the warehouse,
distribution, and transportation activities. Delegating these functions to
someone else gives the company more opportunity to concentrate on their core
activities. It's a function that companies is a firm that provide outsourced tend
to find time consuming and often boring from a paperwork standpoint, so if they
can leave all that up to a third party, that improves their efficiency.
Depending on the terms of the contract, sometimes the 3PL company also handles
billing and collecting payments from company’s customers for the products it
ships. This frees time that your accounting department can use to take care of
other financial matters.
Freeing the company of continually hiring warehouse workers,
replacing fleets of trucks, and paying bills for shipments to customers will
allow them to operate more economically, as they will be able to operate with
less staff.
..................... Sep-12
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