In the post-pandemic world, companies competing without a 3PL partner are at risk.
To survive in the New Normal, your company must operate at peak performance.
Operating at peak performance requires a first-rate supply chain. That means your supply chain operations can’t afford breakdowns or even missteps. They could result in catastrophic failure and strategic loss to your competition.
Logistics and supply chain management have always been unpredictable, complex, and volatile.
But Covid-19 has intensified these three conditions.
Increased uncertainty, complexity and volatility typify the New Normal.
Thus, it’s critical to hire a 3PL to survive and thrive in the New Normal.
There are many reasons to outsource your logistics operations. So, we’ll home in on six crucial reasons you should consider outsourcing to a 3PL.
#1: Focus on your core competencies
In his iconic book, In Search of Excellence, Tom Peters popularized the strategy of focusing on your core competencies. Peters advised businesses to “stick to their knitting”. Not doing so could have dire consequences. You could risk getting sideswiped by your competitors.
Outsourcing will give you more time to strengthen your core competencies. The more time you spend on your core competencies, the more competitive you’ll be.
Hiring a 3PL allows you to become expert at what your business does best. As a result, you can focus your resources on what makes your business great. Running a business today is no easy task. And managing your own supply chain only adds to that complexity.
Honing your core competencies will give you a competitive advantage over your competitors. As you improve your competitive advantage, your top and bottom line will reflect that.
#2: Optimize Your Supply Chain
Supply chain optimization has been all the rage for a while now. That’s because supply chain operations make up a substantial part of product development, delivery, and support.
Done right, optimizing supply chains offered a way to reduce costs, and cut them dramatically. As a result, many businesses set out to optimize their supply chains. They learned this was no easy task, yet persisted in the search for the Holy Grail, if you will.
Enter 3PLs. Today, many 3PLs specialize in optimizing supply chains. They, too, saw this is a way to add value by cutting costs. Over the years, much of that has been accomplished.
Many 3PLs still focus on cost-cutting. Yet, some 3PLs now focus on creating profit centers out of logistics.
Needless to say, your best bet is most likely to hire a 3PL, if you’re intent on optimizing your supply chain. If you want to reduce costs or monetize your supply chain, working with a 3PL offers you a smoother path.
#3: Leverage 3PL’s Experience and Expertise
We’re talking about complexity again. When it comes to logistics and supply chain management, expertise and experience matter.
Leading 3PLs have a talent pool most businesses will find difficult to replicate. And why should they if logistics isn’t a core competency? In an era of increasing specialization, outsourcing the complex business of logistics makes sense.
Remember, 3PLs are expert at their core competency – logistics. Many 3PLs have built their expertise over time. And they also have the added advantage of experience.
When it comes to daily operations, cost control, automated payments, transportation, warehousing, import-export processing, and C-TAPT compliance, it’s tough to beat a 3PL. They’re a treasure trove of expertise and experience that’s hard to replicate. And it’s likely costlier to grow that expertise and experience in-house.
#4: Expand into new markets
According to a report by Statista, about 15% of businesses stated they are moving or plan to move out of China. With many companies leaving China, it’s critical to expand into other markets.
As your business emerges from the pandemic, revenue growth is likely a top concern. Growing revenues will depend, in part, on recapturing domestic demand. Another way to grow revenues is to capture demand in international markets.
But expanding into new markets, requires local expertise. Your business will need help in navigating laws, learning customs, and understanding cultures. That said, your business needs boots-on-the-ground to provide situational awareness.
Building that capability in multiple countries will require investments in time and money. However, leveraging existing capabilities resident within 3PL companies offers a viable alternative. That would shorten your time to penetrate new markets at reduced cost.
So, outsourcing to 3PLs for help in expanding into new markets is timely and cost effective. And that helps give you a competitive edge.
#5: Reduce your risk exposure
Risk abounds in our industry. Supply chain management entails managing risk daily. We conduct business with perpetual risk. That’s an inescapable feature of our industry.
Some risks are predictable. Others are not. As a result, companies engage risk management in varying degrees.
A University of Tennessee white paper highlights three broad categories of risk. They include: (1) people, (2) the environment, and (3) supply chain performance. These include things such as labor strikes, health issues (Covid-19), hurricanes, tsunamis, supplier risk, theft, and cybersecurity.
Add to that economic uncertainty, product and materials shortages, and ship fires. Now you have your hands full as research suggests risk will increase. That makes risk management a front-burner issue.
Before he pandemic, many businesses didn’t give risk management its due. That will change. At most business, it already has. As pressures from risk increase, businesses will turn to 3PLs for help.
Reducing and mitigating risk requires a strategic approach. Covid-19 made that clear. Now, many companies are redoubling their efforts to tackle risk effectively and efficiently. You can bypass a steep learning curve as well as cost by hiring a reliable 3PL.
In fact, the study cited above lists risk management as a primary reason businesses use 3PLs. Reducing risk is no longer an ancillary function. It’s a strategic process that translates into competitive advantage when done right.
#6: Reduce your operating and investment costs
No discussion of business is complete without discussing cost. Also noted above, outsourcing to 3PLs grew because of their skill in slashing costs.
Cost management is still the top concern for shippers. Given their history, 3PLs are more than competent in cutting costs. For example, they excel in delivering all manner of logistics support cost-effectively. It’s tough to out-compete a 3PL that provides logistics services day-in and day-out.
And here’s another reason for partnering with 3PLs. They tend to adopt new technologies sooner than the businesses they support.
Also, by leveraging 3PL capabilities, your businesses can save on its technology investments. With that, 3PLs offer powerful capabilities to your businesses. They achieve that by delivering more effective and efficient operations.
Overall, 3PLs offer an enviable wealth of capabilities. Leveraged properly, 3PLs can deliver concrete competitive advantage that otherwise might seem elusive.
What you can expect when you hire a 3PL
Supply chain operations must continue to operate in unpredictable and volatile times. That was true pre-Covid-19. It’s even truer now.
You’re competing in an environment where only the fittest companies will survive.
As a quick summary, outsourcing to a 3PL partner can help you:
- Allow you to focus on your core competencies
- Optimize your supply chain
- Leverage a 3PL’s talent pool
- Expand into new markets
- Reduce your risk exposure
- Reduce your costs
Hiring a 3PL offers a powerful incentive to help you grow your top line and bottom line.
Why go it alone when you don’t have to?
Understandably, there are many 3PLs to choose from. How can you be sure you’re partnering with the right one?
You only need to look at a 3PL’s emphasis on customer service. At American Global Logistics we provide service that’s second to none. We make your mission our mission.
Contact us now to find out more about how we can help you. We’re ready to discuss your upcoming needs and challenges for today and tomorrow.