Business operations are getting more and more complex by the day. Some businesses are forced to deviate from the traditional method of conducting business so as to keep up with the market demands and the business as a whole. It’s currently a frequent practice to outsource some related company needs to third-party service providers. This has given rise to the development of a set of businesses popularly known as supply chain providers. An accepted and business standard resorted to by small business interest includes the involvement of third party logistics provider’s or also known as 3PL. These are management alternatives that are regarded as cost-effective and provides the required delivery services by a third party. The company is freed of the necessity of transporting services in favour of handling support operations and getting the help of a fulfilment specializing in storage and handling of support operations.
There are specific states in the course running of the business where you need to make decisions on the need to increase storage area and product handling capabilities as a result of an increase in market demand. In circumstances where additional capital expenditure is not available due to the existing financial constrains position of the company, contracting fulfilment serves as a sensible option. It delivers the required capability with a fast turn around time that’s not achievable if the provider decides to expand with its own capital investment. Whenever there’s an urgent need for the storage area in response to an expansion in market coverage, a contract warehouse acts as your fast management alternative. What is great about this kind of setup is that you don’t need to make changes in the company to deal with this expanded capabilities. You can simply work out a service arrangement with a fulfilment to facilitate the delivery and handling of logistics required for handling, storage and movement of products within the distribution chain. The 3PL will offer the facility to run as well as the human resources to work in the expanded facility. Thus, in addition to relieving the company of the capital needs, the business will not be required to hire more employees for the operations and capabilities.
When you discuss with the fulfilment company regarding the needs of the business, the former takes charge of supplying the workforce and logistical operations. For instance, if you’re currently outsourcing the shipping of goods to a new sales territory, the service supplier shall take control of the storage space needed. You do not even need to buy new trucks to transport your goods as the 3PL provider manages a fleet of delivery trucks.
You can choose to move the charging and collection of accounts to the third party as it might be cost effective to outsource the whole business performance cycle of the 3PL business. This relieves extra responsibilities of the business accounting and billing department since the 3PL company will be taking over the collection and billing responsibilities.