How to Know You’re Ready for 3PL

UDL_HowtoKnowYoureReadyv2Your business has grown and your inventory has grown with it. Growth has allowed for new innovations, business models and manners of success, but it also has called for new responsibilities, new employees and new skills. Logistics management is one of the areas now increasingly demanding your time and attention, but before you invest further in in-house logistics operations, it may be time to start considering how third-party logistics providers can make things easier. Below are three things to take into account to see if you are ready:

Consider your overheads 

Your current storage situation has outgrown your space, and now you’re facing the daunting and expensive proposition of expanding your building or leasing/purchasing another. New packaging/labeling requirements, order fulfillment needs, and returned stock have now become an issue that you’re ill-prepared to handle.You find that your profit margin is continually shrinking from additional spending on equipment and labor. A local 3PL can very likely help with all of the above.

What are you selling?

Does your product require special treatment, extra security, unique packaging or timely distribution? Is the bottle created out of post-consumer recycled waste? Do you currently promise two-day shipping? Analyze your current logistics operations and how you handle getting your product to the consumer, from warehouse storage to package design to shipping times. You will either need to be willing to change certain aspects of the process or find a 3PL that can accommodate your specific needs.  Also, if you are selling fragile items, flammable commodities, or sensitive materials (like alcohol or cigarettes), it is important to have full disclosure with your potential 3PL before embarking upon a partnership.

Understand the ways the 3PL companies you’re considering can benefit your business 

Working with a 3PL can feel like putting the lifeline of your business into the hands of someone else. You need to research the ways they are available to you, looking at customer service, problem solving abilities, how they can help your business technologically, if they have proper security technologies set in place, and if they can help with special requirements.  Some 3PLs won’t be able to handle every need but can take care of core areas, such as warehousing and transportation. Research how 3PLs can help save your company funds, manpower and time. It can be one of the best decisions your company has ever made.

A Brief History of the Role of 3PLs

UDL_BriefHistory3PLSv3The roots of third-party logistics (3PL) go back hundreds of years – from its start in shipping products by land and sea in the 1700s, to rail and steam at the height of the Industrial Revolution, to modern day, 21st century advances that manage and track packages electronically.

3PLs have always stood at the crossroads of history, ushering in and paving the way for tremendous changes in how a society functions and grows. The industry we call 3PL didn’t officially get its name until the 1970s, but it has existed for hundreds of years, getting packages from the country sides of England to their colonies across continents and oceans in the New World, to being able to fly or ship products from coast-to-coast in a matter of hours today.

Academically, the industry is today defined by the Council of Supply Chain Management Professionals’ glossary of a 3PL as: “A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.”

Here is how the industry has changed over time:

Agricultural:  Logistics during the agrarian lifestyle of the 1600s and 1700s included horses and buggies or ships. 3PL merchants and vendors were heavily relied upon for critical freight, such as medicine, war supplies and food. Agriculture was virtually the only source of raw materials in the New World, with shipments of food crops, cotton and wool paving the way for city growth.

Textiles: After the 1760s, advancements in the textile industry created changes that allowed textiles to be woven faster by automated processes and machinery than by hand. Warehousing and factories became common places for employment, especially in this industry, where women and children produced textiles in large industrial structures and facilities.

Mining: Originally, coal was managed in mines and shafts by laborers. By the 1800s, to manage the rising energy production needs in the U.S., coal supply companies developed processes that transported coal by ponies and carts, helping to boost coal production from 2.5 million tons to 15 million tons by 1829.

Transportation: Demand for distribution services skyrocketed during the Industrial Revolution. 3PL companies became powerhouses that not only used ships and horses to manage transportation but now railroads, which supplied more goods at a quicker, more efficient rate than ever before. Coal and steam-powered locomotives allowed logistics solutions for companies, towns and individuals all over the country, even remote areas where communities were just being settled. International logistics became a focus at this time, too, as transportation became easier and ships became larger to meet growing trade demands.

3PL companies coordinate delivery among all of these methods – air, sea, land and rail. Logistics distribution grows every time a new transportation network evolves, as population increases and as technology and demand for certain goods changes. Distribution, warehousing, packaging and transportation services will always be needed by industries with any demand, and 3PL management is key to the success of many. The 21st century is expected to usher in a number of changes for logistic companies, including greener, more ecological practices and more efficient technology.