Third Party Logistics (3PL) Vs In-house What’s the Right Path For Your Business

Logistics refers to the management of goods flowing between the origin and consumption point in order to meet specific requirements. This process can either break or make e-commerce businesses. For boxes to be correctly delivered to customers on time, exceptional logistic skills are required to meet customers’ expectations.

3PLversesInHouse

Third-Party Logistics Company

Quite a number of start-ups opt for the outsourcing option to fulfill their order through a 3PL company. A third-party company that offers these services manages all the functions in the supply chain on behalf of the consumer. Under the Third-party model, three parties must be involved for a product to reach a customer, i.e., the customer, the manufacturer, and the Third-party firm.

The providers of Third-party firm mainly specialize in warehousing, operation, and transportation services that can be customized and scaled based on the needs of the customers, market conditions and the delivery service, and demand requirements for materials and products. When choosing a third-party provider, it is important to inquire how many locations the firm has to ensure that they can efficiently cover territories with target sales. Also, find out their competitive price, competitors, and area of specialization.

Advantages of a 3PL Firm

Third-party companies have large warehouses with multiple locations from where shipments of products can be done faster. A 3PL allows people to focus on their company’s core competencies and strengths since the handle warehousing, distribution and order fulfillment.

Working with a third-party firm enables customers to scale up or scale down operations as per the volume of an order. Scaling up is useful when a company needs to expand its business into new areas or seasonal and growth periods like the holidays.

Another advantage of a 3PL firm is the availability of accessing a larger resource network that provides fast and high quality as well as volume discounts. The use of a 3PL provider saves on time and the cost of investing in technology, transportation, warehouse storage, and staffing. The 3PL providers are experienced and help companies to cut down on paperwork, audits, and billing. The freight broker from the specialized provider is up to date with the latest technology, software, developments, and techniques in the industry.

Management of In-house Logistics

It is important to ensure that there is enough space to layout paperwork and orders apart from box storage. Setting realistic expectations will guarantee that the customer will be aware of exactly how long it will take for the product to be delivered. Also, customers should be informed if the shipment will be done by a designer or a warehouse. Whenever there is a delay, customers should be updated on the progress. Discounts and dress shipping can also be considered to compensate a screw-up or a customer’s awful shipping experience.

A third-party firm is a great support system for most companies and businesses because it allows them to focus on core competencies. However, it should be a company’s long-term goal to hire specialized company with highly qualified and experienced freight broker to handle their flow of goods from the producer.

Justin Bright – CEO Brighter Logistics

Accessorial Charges That Affect Your LTL Freight Rates

There are many factors that can affect your general LTL shipping rates, accessorial charges are often overlooked and more times than not are one of the main factors.  Having a good working knowledge of what accessorial charges are and how to minimize each of the various occurrences will help reduce your LTL freight costs.  Many of our shippers have never heard of accessorial charges so below I have outlined a few of the most common ones for your review.

Accessorial Charges

Accessorial charges are added services that the transporter of your freight might provide above and beyond the typical shipping and receiving services they provide for a shipment. The fees will more than likely be evaluated and applied after the shipment has been made.  The makes it hard to estimate and account for in your transportation budget. Base rates under the accessorial category are the central portion of all LTL freight costs, accessorial fees can add up quickly, adding up to a substantial rise in your transportation expenses. Here are a few of the most common accessorial charges:

Lift Gate Service

Commercial trucks are specifically designed to be loaded and unloaded using loading docks. When deliveries are made to residential addresses there are no loading docks to quickly unload the truck, therefore a lift gated is used to lower the freight. This is an added expense for the truck, that is where an additional charge is required for use of a lift gate.  if the freight carrier is unaware that a lift gate is needed and they arrive without the required equipment to make the delivery, they will not be able to make the delivery, adding an additional re-delivery charge to your shipment.

Inside Delivery

In most lift gate delivery situations, an inside delivery will be needed. This carries another accessorial charge for inside delivery. It is an extra fee because it involves added equipment (a pallet jack), additional time and in many cases the carrier will need an additional person to help delivery the freight inside.

Restricted Access

Occasionally, the pickup or delivery is slightly more complex offering only limited access to the freight. This can happen with commercial and residential delivery sites. Typically, it’s because the location requires additional time or after hours’ service because they cannot accept deliveries during regular business hours.

Accessorial charges are always negotiable, but need to be considered when negotiating rates with LTL freight brokers into your total shipping cost. When looking to decrease your LTL freight costs, you must keep accessorial rates on your radar and don’t be fooled by low base rates.

To avoid unnecessary accessorial charges always work with a well-established 3PL. They should be able to negotiate rates on accessorial charges as well as the right questions about your shipment to save you the most money as possible.

Justin Bright – CEO Brighter Logistics

Important Factors for an Optimal 3PL Experience

A lot of shippers prefer to first focus on the prices that a 3PL freight broker charges, while at the same time, the price is a matter of concern as most shippers can take this to their advantage and level up, so to speak. SO, how is it that shippers can make improvements to their 3PL experience?

3PL Freight Brokers

Upgrade your Proposal Request

You must ensure that all operational data has been included, and in detail too. This is important for thorough analysis before an informed response can be sent back. Mostly, 3PLs spend thousands in coming up with a response just to lose it. It is for this reason that they may choose to avoid pursuing a project whose proposal doesn’t include the relevant details for an informed proposal. Additionally, accuracy is important and if for any reason a 3PL under prices a project due to inaccurate data, budget and performance are going to be hurt in the process.

Set achievable Expectations

In case your company has been having the same problem year on year, you shouldn’t expect that your problems will immediately incinerate with a 3PL. Even though they are experts, they too will be facing similar challenges as you’d have when trying to fix the issue by yourself. Setting realistic goals and anticipations from the very start and collaboratively working together tends to solve the problem.

Set Terms of Contract Clearly

It is often rumored that the contract can never be an afterthought and most of the times, services, and billing disputes are ruinous to relationships. Indeed, contracts can be daunting not to mention lengthy and they also state precisely what you expect the contract to perform, performance measures and the terms of payment.

Use Resources Available to Manage the relationship

One of the most common failures of companies that use outsourcing is inadequate resources and effort dedicated to communication, management of changes and handing overs as well as performance management. Though it may seem like outsourcing takes away daily motions for logistics execution, it merely adds a need for management in other diverse areas. By working with you person on person, you will be both working towards the benefit of the partnership.

Communicate in regular timeframes sticking to the plan regarding communications matters is imperative and should be with the minimal deviation be it a daily call, monthly meeting or a quarterly gathering, you need to look upon this as a mandatory requirement.

Focus on Important Metrics

The amount of data to be analyzed and reported is virtually endless and there is no good if the data does not lead to gains or improvements in productivity, cuts in cost and the improvement of customer service. First, you need to take a keen look at some key performance indicators which is good, to begin with.

Justin Bright – CEO Brighter Logistics