Why using a third-party logistics (3PL) provider for inventory management is a smart move

  (photo credit: INGIMAGE)
(photo credit: INGIMAGE)

Companies are bound to run into trouble if they have an inadequate inventory or an excessive stockpile. However, the unfortunate truth is that many business owners do not possess the skills that are required to strike a balance between these contradictory conditions. The management of inventories may be a nuisance at times, but experienced supply chain managers are aware of the need of using the most efficient solutions that are currently available.

The management of commodities in the supply chain is one of the aspects of inventory control that is considered to be among the most critical and challenging. Identifying client expectations accurately is a difficult task. For their businesses to be successful, manufacturers need to ensure that the activity of their upstream suppliers is in harmony with the demands of their downstream customers. It is vital to prevent both surpluses and scarcity of warehouse items. This dilemma highlights the necessity for effective inventory management.

Whether or not you should use a 3PL relies on a variety of criteria, including the stage of your organization, your current infrastructure, and the customer support services you need. The advantages of utilizing a third-party logistics business might be wonderful in the following scenario, despite the fact that it is not always advisable:

  • If you run a seasonal retail firm, a third-party logistics provider (or 3PL) is a smart investment. Your fulfillment needs will be handled by a 3PL rather than requiring you to compensate for additional warehouse space or hire more staff to deal with these surges.
  • Secondly, if you have 3PLs handling your inventory, you'll be a lot more flexible when dealing with online customers' shifting demands. Let a third-party logistics provider (or 3PL) handle the logistics for you while you gain more experience in handling online business.
  • Thirdly, prior to making a large investment in foreign warehouses and distribution centers, try a 3PL first. This will help you may gain a clear picture of how your organization will perform in new locations.

Before you go ahead and opt for a 3PL, take into consideration the following:

Present and future volumes

A 3PL should be able to manage your existing volume, but also be prepared to properly manage the volume of stock if you unexpectedly add a lot of fresh stock, raise your stock quantities, or have a big surge in sales by becoming global. As your company expands or when demand spikes, you'll require a 3PL that can help you scale without much hassle by taking care of the management of inventory and the dispatch process. 

Business performance and references

Consult with other consumers who have used the 3PL provider in the past to obtain a sense of the company's track record. Determine whether the company you are considering provides on-time delivery or compensation in the event of an issue. Customer testimonials and case studies are strong indicators of how well a 3PL supplier has done in establishing and maintaining a connection with its clients.

Suitable technology

In the event that you're employing a cloud-based inventory management system, you'll want to look for a firm that is also truly groundbreaking and ready to link with your inventory control software. Check to see whether the 3PL provider's technology is compatible with your systems.

The supply chain may benefit tremendously from the addition of a 3PL. The benefits that come to companies when they form partnerships with reputable 3PLs are almost endless. However, keep in mind that not all 3PLs are made equal. Pick a service whose qualities guarantee that they can come through with what they promise. Pick a third-party logistics provider who is enthusiastic about your company. 

This article was written in cooperation with PackageX