Outsourcing is all the rage these days- especially in the supply chain. When it comes to shipping, distribution, warehousing, and fulfillment, businesses are contracting out to 3PLs for segments- or all -of their supply chain. A logistics provider’s performance can have a strong influence on a company’s overall performance. There are three essential elements of 3PLs. Here’s what they are:
Key elements of 3PLs
Third-party logistics providers offer supply chain management to companies, yes. But at their core, they offer much more. The essence of 3PLs is enhancing customer experience because they aren’t limited by in-house competencies, like owning warehouses or means of transportation. Since they make fewer investments in physical assets, outsourcing providers invest in their customers. Instead of in-house services, long-term mutually beneficial customer-provider relationships are what 3PLs are all about. Generally, companies choose 3PLs for their flexible capabilities: customization, broad range of services, and management expertise. But companies stick with 3PLs because they exceed their expectations.
Shared goals and cooperation are what unify customers and providers and set them up for success. Establishing mutual goals helps providers to proactively create solutions for a customer’s situation and challenges. Without common values and a concrete purpose, supply chain management can get messy, which can lead to conflict. Mutual decisions about what success looks like in your supply chain are key to both day-to-day operations and long-term performance.
An outsourcing provider’s performance is only as good as their customer’s supply chain performance. Because of this, it’s in a provider’s best interest to come up with the most efficient, low-risk solutions possible. The flexible and scalable nature of 3PLs helps to create mutually beneficial goals that are fundamentally important to customer-provider relationships.
Today the supply chain is changing rapidly and, no matter the industry, companies are having to adjust their logistics strategies. Customers expect their logistics providers to add value to their company, right? To outsourcing providers, this means continuously innovating.
Often, achieving shared goals is contingent on on-going improvements. Dedication to innovation and optimization allows the provider to enhance solutions in real-time. A 3PL’s proactive approach to improvement lends itself to innovation in a company’s supply chain, which fundamentally adds value. Since third party providers outsource to a network of service providers, they’re able to allocate resources to accommodate unique challenges and engineer optimized solutions. 3PLs primarily invest in intangibles, like industry expertise and technology. Supply chain experts and robust provider networks are both crucial to achieving goals to improve supply chain management.
As elementary as it seems – communication is key. The quality of a 3PL’s communication and interaction is reflective of what you can expect from their outsourcing performance. From the beginning, 3PLs are strategic in communicating goals and expectations. But beyond that, transparency between one another’s operations is critical to the partnership. The (not so) secret to an affluent and long-term provider-customer relationship is communicating both situational challenges and achievements.
The communicative nature of 3PLs fosters an alliance between companies and their providers .3PLs are so known for exceeding customers’ expectations when it comes to communication because they cannot, themselves, operate without extensive knowledge about a customer and their company. Inversely, how well can a company operate with ill-informed supply chain management?
What services do 3PLs offer?
We know that 3PLs focus on customer experience, operational performance, and asset reduction. In turn, outsourcing logistics providers use a network of resources to offer a number of services like:
- warehouse management
- cross docking
- courier services
- expertise & solutions
- reverse logistics
- logistics technology & information technology
- value added services (assembly/labeling/barcodes/inspection)
- custom logistics solutions & strategies
3PLs are the difference between meeting and exceeding expectations
In all, the key elements of 3PLs are what foster the unique customer-provider relationship they’re known for. In an alliance driven by shared goals, strong communication can motivate providers to be innovative and improve a customer’s experience. When customers’ expectations are exceeded, they want to reciprocate. Proactive goal setting and communication creates long-term loyal customers and advocates. See? Mutual benefits.
Ultimately, third-party logistics providers are not defined by their services. Rather, one may argue that the essence of 3PLs is goal exceedance.
RTD Logistics is 3PL and these key components have been integral in providing proactive logistics solutions since 1986.
Want to know more about 3PLs? Learn about how 36 years of experience has made us a preferred outsourcing provider at RTDLogistics.com