Running all of your operations in-house can be costly, especially when first starting in the market. Some costs that can hinder your businesses performance are start up costs, technology, equipment, employees, and distribution. Partnering with a 3PL provider can help reduce some of these costs through the many g services they provide.
Here are 7 ways using a 3PL service can reduce costs for your business.
Shared warehousing
A large portion of the costs it takes to start or enter a business in a new market is the cost of storing your product. Cold, ambient and frozen storage can be especially costly when trying to find space with them all under one roof.
This is where a 3PL can help you.
Instead of renting or purchasing your own warehousing space, which can be a pricey upfront investment when a customer base isn't fully established, working with a 3PL can give you access to their storage facilities.
As 3PL providers have more than one client, they need more space to house all their clients' products, often in large volumes. They also serve different scopes of clients with different needs, so multiple storage solutions are often available in their location. As many clients are paying for the different amounts of space, the provider can establish cheaper rates for using their warehousing since their costs are covered by many.
Lower upfront investment than starting from new
When starting a business there will always be costs that are required upfront to get your business running.
The following are just a few examples of the necessities when starting up.
- Workers to pick and pack product
- A system for managing warehouse products, orders, deliveries, customers
- Reliable means for transportation
- Insurance
- Space to store your product
While all these requirements may seem daunting, 3PL providers offer these as part of their services. This allows you to reduce your starting costs and have the ability to sell your products almost immediately.
Baked-in Technology
The saying “Time is money” is that much more when it comes to running a business where delays, shorts, and delivery issues can greatly affect profit. The technology that comes with a 3PL is designed to save time and make you more money.
Order Management
When working in-house on a smaller scale, it may e receiving and executing orders can be manageable. However, as your operations grow, the number of orders and manpower required to process them all can quickly get away from you. This is where order management technology comes in to save you time, and money. Orders can be processed digitally which allows for a substantial increase in automation, resulting in less time and money spent on managing orders.
Inventory
Similar to order management, once your inventory begins to grow, the likelihood of lost or damaged products increases. Using an inventory management s, you can manage and gain visibility into the inventory on hand. By knowing what items are in stock, chances or shorts and unfulfilled orders are decreased, saving you money.
Customer management.
The technological solutions to these pain points save you time, and more importantly, money. While this technology can be acquired for in-house operations, the costs to purchase and implement the technology alone can deter users. That is why working with a 3PL and using their tech is one of the best ways to reduce costs.
Transportation Costs
Another area 3PL providers can greatly reduce costs is through the transportation services they offer. Often, 3PL providers have deals with distribution companies or even own their fleet of vehicles.
Both of these allow for lower transportation costs. As well, the insurance, maintenance, and storing of the vehicles are taken care of by the 3PL when it’s their vehicles.
This is much cheaper than paying for all of the above yourself and managing more vehicles if you worked solely in-house.
Scalability based on usage
Another cost-reducing feature of most 3PL providers is the scalability they offer. The services businesses receive from a 3PL are not the same for everyone. They are wholly based on your businesses’ unique situation.r. In other words, you only pay for what you need. r.
You can use less of what they provide while you’re just starting, which costs you less. On the other end, as you grow and make more profit, you can enlist more from the 3PL to help manage.
To learn more about scalability within 3PL, check out last months blog post about the importance of scalability.
Labour and equipment
The cost of employing and paying your employees to pick and pack products or transport items is another cost that can add up quickly, especially when first starting.
A 3PL has expert employees in labour, transport, and customer service. By using the employees provided and managed by the 3PL, you can avoid the time and stress of hiring and managing your own employees.
Equally important, equipment at your disposal from your 3PL. This can be much less expensive than purchasing your own in-house.
Experience and expertise
Experience in an industry is priceless, and a 3PL provider has the knowledge you need to get your business off the ground. Through their experience and expertise, they help your company be the best it can be. The experience in itself reduces costs as you have an expert on your side to help you navigate any obstacle you may face along the supply chain. For instance, their prior experience in navigating geo-political events, weather events, and more, allow them to utilize their past experiences to assist you should another event occur.
At Birkby, We Help You Save
Here at Birkby, we strive to provide you with fair prices and cost-reducing support . Our experience in the industry and 3PL services allow you to focus on what's important, all while reducing your costs.
Our 3PL services include:
- Performance insights and reporting for every part of the supply chain
- Dedicated fulfillment and service support teams able to scale to your operations
- World-class technology, powered by Routeique™
- Scalable infrastructure and resources to accommodate your growth
- Over 40,000 Sq Ft of storage space for all your warehousing needs
- 24-hour continuous operation
- Cross docking capabilities
Looking for a 3PL Provider?
Contact us today to learn more about Birkby’s comprehensive 3PL Solutions.
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