There is a lot of talk these days about the benefits of outsourcing transportation services to third-party logistics providers. Many companies have dismantled their own private fleet in favor of an outside provider. However, it’s always best to look before you leap. What works for one company may not be the best option for another? If you’re considering the switch from a private fleet to outsourcing to a 3PL, consider these three factors.
If you’re struggling to get your products into the hands of the people who want them, you’re going to lose their business. There’s always competition nipping at your heels. Slip up, and they’ll swoop in and take care of your customers for you. With a 3PL on your side, you have the ability to up-size your fleet to satisfy an increase in demand, meaning you never have to worry about getting left behind. What’s more, if demand decreases, adjustments can be made to accommodate a lighter load without employee layoffs or selling/storing part of the fleet.
Budget constraints are a constant concern for businesses of all sizes. Spend too much in one area and other aspects of your business will suffer. Fleet vehicle acquisition, maintenance, repairs, fuel, driver compensation, insurance and regulatory compliance add up to a hefty sum, even for the smallest of fleets. When those costs overwhelm a budget, the resulting shock waves will be felt throughout the company. For the most part, 3PL’s are a more cost-effective means of providing essential transportation services. Costs are controlled, freeing up capital for daily operations and future investments.
Are you planning on expanding your company’s offerings? Perhaps you’re considering the viability of expanding into new geographic areas to capitalize on new markets. Investing in a large fleet of vehicles to service new markets, or to deliver untested products is a risky endeavor. What happens if the market doesn’t produce a large enough volume to sustain the fleet? If an area doesn’t pan out, how will you recover the investments you’ve made? These are tough questions to answer. With an outsourced transportation provider, your investment is minimal, allowing you to test the market without getting in over your head.
Regardless of the size of your business, or the products you offer, it’s imperative that you maintain the supply chain. If you already own a private fleet, consider the benefits of outsourcing to a third-party logistics provider. Likewise, if you don’t have a fleet of your own, weigh the benefits of dealing with a trusted provider. In both instances, you’re likely to see that it is a smart business decision.