The success of a business relies on its customers’ satisfaction and it all starts with how they manage their supply chain. Inventory management is a crucial part of the supply chain, making up the bulk of your business processes. If problems are not addressed immediately and correctly, the goal of satisfying customers will not be met and will negatively affect your brand.
Nowadays, businesses rely on third-party logistics (3pl) partners to manage their supply chain for them. This has already been a standard practice for many years, especially for large businesses but recently, even small and medium-sized businesses have taken advantage of the benefits of using the services of a 3pl. The rise of e-commerce over the last several years has allowed smaller businesses to expand their reach all over the world. Because of this, sellers have to find ways to deliver their products to their clients effectively and this can be done through the services of a 3pl.
Advantages of 3pl warehousing services
Many e-commerce businesses source their products in China due to the low costs. However, the most common problem when sourcing products in a foreign country is storage. Large businesses can afford their warehouses to store their products but smaller businesses don’t have that kind of luxury. That’s what a 3pl company can offer to businesses with limited resources.
If you partner up with a 3pl company, you will be using their warehouse to store your products straight from the supplier or manufacturer. No need to find or lease another storage to house your goods because warehousing is already included in the services they offer. Getting 3pl services will greatly benefit tor business and here are some of the reasons why:
Save on overhead costs. Since 3pl companies have their own warehouse, you will save money on costs unlike when you have to rent your own. Not only that, but you will also save on labor costs because they have a staff that will manage the warehouse. This improves the efficiency of the supply chain process as you already have the resources in one place.
Uses advanced technology. 3pl companies use state-of-the-art warehouse technology which adds to the efficiency of the entire supply chain process. Demands can fluctuate anytime so it is important that your 3pl partner can provide a seamless approach when managing inventory to avoid delays. It is also easier nowadays because they can already integrate their system into your e-commerce shop so any orders you get will automatically be updated with the warehouse.
Allows flexibility and scalability. Another great thing about partnering with a 3pl is that they can accommodate any increase in demands you might experience. It might be due to a store sale or you are planning to expand your business. Whatever the reason for the influx, the warehouse is capable of adjusting to your business needs.
Work with experts. Running an e-commerce business can be overwhelming especially since you have to think about the storage and transportation of goods to other parts of the world. It involves a lot of legal documentation and strategic planning to ensure that the orders will be delivered to the consumers in great condition and on time. A 3pl company has competent staff who are knowledgeable when it comes to the rules and regulations. They can also anticipate problems and provide necessary solutions immediately.
Reduces risk. Operating a warehouse and managing inventory on your own is risky especially if you do not have enough knowledge and resources for them. By getting the services of a 3pl company, the risk is greatly reduced, resulting in more efficient operations and a great customer experience. You will also have peace of mind while focusing on the other aspects of your business.
What happens in a 3pl warehouse?
When availing of the warehousing services of a 3pl partner, you get to enjoy the whole package of order fulfillment services. Here are the steps involved in 3pl warehousing:
- Receiving and inventory management. Once your products are done, the 3pl staff will schedule to pick them up from your manufacturer. Then they will store them in the warehouse based on their SKU or Stock Keeping Unit. When the items arrive in the warehouse, they will be registered into the system to keep track of the inventory easily. You will also have access to the inventory so you can be updated in real time with the status of your stocks.
- Picking and packing. Since your e-commerce store is integrated with your 3pl partner’s system, they will be notified immediately whenever you receive an order. They will pick the items being ordered and pack them to prepare for shipping. Most use standard packaging but some 3pl companies offer customized packaging for your products which can add to the satisfaction of your customers. Then, they will attach important labels such as delivery addresses and receipts.
- Shipping. 3pl companies already have their shipping partners but they can also compare different shipment services to find the right option for your needs. They will negotiate the best rates so that you can get the best services without breaking the bank or sacrificing delivery times. Once the orders are packed, they will be picked up by the shipping partner and the tracking information will be uploaded to the 3pl’s management system and also to the business’s store platform. Customers will also receive the tracking details.
- Returns processing. Not all orders will be successful every time. Some customers might not be satisfied with what they receive so they end up returning the items. Returned items will be sent back to the 3pl warehouse and the staff will determine whether to keep or dispose of them depending on your preferences or policies. Check whether your potential 3pl partner offers a returns processing service as this can save you a lot of trouble when managing returns on your own.
How to choose the right 3pl warehousing services?
Getting the services of 3pl warehousing will benefit your business a lot in the long run. You do not have to worry about reliability because they are the most experienced when it comes to supply chain management. There are a lot of existing 3pl companies today in the market so it is important to find the most suitable for your business.
First, you have to consider the type of products you have to store. If your products require to be in a controlled environment, you have to look for a 3pl warehouse that can store them. Second, the location of the 3pl warehouse is also a good factor to consider. Warehouses located near your customers mean lower shipment costs and faster shipping times. Lastly, look for the services that a 3pl company offers. Aside from the basic services, they might offer additional services that can give a boost to your branding and credibility.
Don’t fall for the lowest prices immediately but don’t go for the most expensive as well. The highest price doesn’t always mean great services. If you find a potential 3pl partner with good services, negotiate for a reasonable price that is well within your budget.
All businesses should consider getting 3pl warehousing services because it will definitely maximize your business operations. It is already a one-stop-shop solution to manage and streamline your supply chain. Order fulfillment is made easier because of this service so if you are in a saturated market, projecting a high volume of orders, or expanding your business anytime soon, better get the services of a 3pl company.