Logistics and Supply Chain Management are the backbone of E-commerce.
In a world that is becoming more connected and complex, outsourcing to save time and money is becoming increasingly popular in E-commerce. Outsourcing is paying another company to handle an aspect of your business, with the idea that they will do it more efficiently and better than you do. In terms of logistics and supply chain management, aspects that many entrepreneurs and E-commerce owners tend to overlook, this can be especially helpful. Logistics and supply chain management is the backbone of an E-commerce, and for certain owners, outsourcing logistics services to experts can be a great solution.
It’s important to approach outsourcing from a partnership stance. Allowing an e-fulfilment company handle your logistics means that you’re trusting experts to do what they do best, while you focus your personal expertise where it counts. Supply chain and logistics management requires careful planning, cost analysis, and experience to be optimized efficiently, and third-party logistics providers have an investment in your company’s success. Don’t think of them as a service provider, think of them as a partner dedicated to making your logistics the best it can possibly be.
Here are 5 reasons to outsource logistics and supply chain management:
- Cut costs by Gaining Experience
- Use the size of an E-fulfillment company to your advantage
- Get access to optimized Transport Management System and software
- Profit from their logistics innovation
- Allow them to handle risk management
1. Cut Costs by Gaining Experience
Time is money, a truth that applies to even the largest E-commerce. Taking the time to train, implement, and optimize a good logistics team is costly. Instead, using an externalized logistics company gives you direct access to a team of experts with the experience that you might not have. This can be especially true if you’re looking to externalize for international export. Having a company dedicated to your logistics which is already implemented in your target country gives you access to insider market knowledge about your customers.
Using an externalized logistics company gives you direct access to a team of experts with the experience.
Inventory and logistics are expensive, and their optimization can be even more so. Renting facilities and hiring personnel to man them is a huge cost, especially for smaller E-commerce sites. 3PL (or Third Party Logistics) providers already have a team of logistics experts and the warehouses necessary to handle the volume of your orders.
2. Using the 3PL’s size to your advantage
The biggest advantage of using a 3PL provider is in leveraging their resources. A logistics company will have exclusive access to a network of carriers and will be better able to choose the best possible carrier for your inventory. For example, companies looking to export into Europe will be able to use the best carriers in the EU, while utilizing methods of delivery that are unique to the region.
A 3PL company will also be able to consolidate shipping into larger freight and save each of their customers on shipping costs. In doing this, they can negotiate lower fuel surcharges and obtain shipping discounts by leveraging several customers into the same freight.
3. Access to technology and software
When choosing an appropriate back office software system, it can be difficult and expensive to get one that’s comprehensive and includes everything necessary to run your E-commerce effectively. The aspect that is often overlooked is shipping and logistics. A 3PL provider’s transportation management system (TMS) is dedicated to logistics and supply-chain management. They have already done the research and monetary investment in choosing (or even developing) an excellent TMS, and by partnering with a 3PL provider, you gain access to that system.
Many 3PL providers offer data from their operations that help you analyze the optimization of your logistics which will allow you to better respond to your customer’s demands.
Many 3PL providers will offer you useful data on your shipping optimization, with detailed reports on your freight. This will help you analyze your customer’s shopping tendencies and keep tabs on the quality of service in regards to the delivery of your goods. This helps you keep track of your customer feedback and respond to their needs easier.
4. Profit from Logistics Innovation
While you’re busy innovating in the ways you respond to customer needs, how you market to your customers, and how to improve your business, your logistics provider will be busy innovating their business to help yours grow. Supply chain management is constantly changing, especially in a globalized world. Reputable 3PL providers are always innovating to make their business more efficient, and that innovation passes on to you and makes your business more efficient too. Your partnership with an E-fulfillment service provider means that you have your own team of logistics experts monitoring and analyzing your logistics every day.
5. They’ll handle Risk Management
Creating a partnership with a 3PL provider helps in terms of risk management. From the moment your inventory is in the hands of an E-fulfillment company, they handle the safekeeping and delivery of your products. 3PL providers have experience managing carrier contracts, safety regulations, and insurance administration.
3PL providers have experience managing carrier contracts, safety regulations, and insurance administration with experience.
3PL providers are able to manage the entire freight claims process so that if anything is lost, stolen, or damaged, they’ll have it covered on their insurance, which removes insurance costs on your end. They also handle auditing of carriers and of their own warehouse facility to reduce as much shrinkage as possible. When exporting, an e-fulfilment logistics company can provide tax and legal services as well, especially if they’re specialized in export services. This can protect you from fines and penalties that could slow your progress abroad.
Many E-fulfillment companies offer many other services to complement the typical benefits of choosing a logistics partner. For example, Mister Logistics is a French/American company specialized in the import of US companies to Europe. They offer the above services, as well as country targeted marketing, website preparation, legal representation, and registration management. They also benefit from Community Transit Status, which means that duties and customs can be delayed until the inventory reaches their warehouse. Their legal and tax services can be particularly useful for dealing with the tricky variable VAT system in the EU.
It will take careful analysis to determine if outsourcing logistics to a 3PL is right for your e-commerce, but there are definitely advantages in doing so. Creating this partnership with a logistics expert can save you time and money, give you access to key tools that would otherwise be expensive or difficult to obtain, and take some of the workloads off of your E-commerce. These factors will help you focus your resources in improving other areas of your business management, and help your E-commerce grow.