Pros And Cons Of Hiring 3PL Companies
Third-party logistics companies provide much-needed support to the manufacturers who are working for bigger targets but with limited resources. However, it adds to the cost in certain hidden ways. So, weigh the pros and cons correctly.
Manufacturing units are mostly located in remote areas or outside the city. They need to have their in-house storage areas for keeping materials and finished goods. All these arrangements may seem less whenever there is any change in the order size in a positive direction. Increase in market size is one of the situations where the role of 3PL companies in India becomes important. But, what the other benefits are, let’s find out.
Before we weigh the pros and cons, let’s find out what actually the 3PL companies do. Their important specialties are:
- Contracting the movement of raw materials and finished goods
- Procurement of suitable transportation needs
- Inventory management and audit
- Freight brokerage and audit
- Shipment tracking and audit
- Reverse logistics for carrying back the excess materials and goods to the origin
Important benefits of 3PL companies
The 3PL companies or third party logistics companies are involved in the matters of managing the supplies for production and distributing the finished goods to the points of sale. These companies know all about the storage, packaging and movement needs of the goods and have the best possible infrastructure for carrying out these processes. So, the manufacturing unit can eye for higher and better goals year on year without wasting resources on the processes surrounding the main activity.
When the whole of supplies management and logistics are contracted out to professionals, the costs are greatly reduced. The manufacturing unit managers need not worry about the shipping concerns, materials management, warehousing requirements and security of the goods and raw ingredients stored in a remote location. Since all these activities individually can cost a lot, contracting offers a pocket-friendly way of doing so.
Easy management of shipping issues like items lost or damaged in transit, the uncertainty of delivery schedule, brokerage issues, etc. is also possible when the job is given away to the professionals. The manufacturing unit is involved only in assuring the production of the best quality goods as per the contract terms when such administrative issues are handled separately.
Doing market research in the territories requires a huge effort. The shipping and logistics management companies located in the target territories come with the goldmine of knowledge about the demand overview in the new market, customer expectations and behavior and so on. So, creating a new warehouse point in an unknown territory is way dicey than using the existing ones for the purpose.
Last but not least, the third-party logistics companies can be depended upon for the fulfillment services, making it easy for the makers to attend to customers demanding single or low quantity of products. These locally situated logistics companies make the delivery process quicker and accurate too.
Though all looks well from the points mentioned above, the cons of hiring the shipping and logistics companies cannot be ignored.
Here is the catch
The 3PL logistics companies may have loads of benefits to offer, but the onus lies on the brand to find out who to associate with and in what way. Some of the challenges of hiring these logistics partners like the Top Warehousing Companies In India are:
- The logistics companies’ record has to complement the brand image
- The logistics companies should not have painted a rosy picture only for taking the order
- The cost of hiring the logistics support providers can be a big concern
- Going back to the in-house logistics management can become almost impossible in the want of experience and knowledge about trending situations.
So, do in-depth research before assigning the job of logistics management to third-party companies. It is helpful in multiple ways.