Is my business too small for 3PL services?

Time and time again we come across companies that are either start-ups or companies that are getting to the point where they feel most of their time is spent on managing their supply chain or logistic operations.  Dealing with the different carriers such as UPS, FedEx, DHL, or the multiple trucking companies for scheduling pick ups, setting up delivery times, negotiating pricing models around your business, making sure that your shipments are insured and secured, while trying to meet on-time-delivery commitments and keeping up with your daily business activities can be very difficult.   For small businesses, sales, marketing and advertising should be the most important priority.  After all, without sales, you cannot survive.  Your time is valuable and warehousing, shipping, and other logistical operations should not be taking too much of it.  Many companies wind up losing focus of what they really have to concentrate on when they spend their time thinking about shipping and warehousing.  In most cases, small businesses or even large businesses for that matter, do not have the relationships, software, technology equipment, shipping and packaging components, or the space available to run their own warehousing and shipping operations in-house, causing them to either always purchase or lease some of these items.  This can be very costly and not calculated accurately when trying to determine if outsourcing makes sense for your business.  In all, if not most cases, if your business is not warehousing, packaging, and distribution, than you will not have the competencies to be efficient and economically sound in these areas.

That said, in a very rare case, where your organization has very little cash-on-hand for outsourcing to a third-party logistics (3PL) company and literally are operating on a month-to-month basis, then you may not be in a position to fund a 3PL company but, in almost all cases, this is not the situation, and when you evaluate all the benefits you will wind up saving money outsourcing instead.  In fact, after a thorough analysis of your packaging, warehousing, and shipping requirements, you may wind up asking the question “Can we afford not to use a 3PL?”

By: Munir Panah

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