July 2013 | Commentary | 3PL Line

3PLs Can Provide Soft Cost Savings for Small Businesses

Tags: 3PL, Supply Chain Management

Bobby Harris is CEO, BlueGrace Logistics, 813-645-3100

Shipping is the second-largest cost many small businesses incur, after labor. Despite the challenges they face—including high gas prices, advancing technologies, and competitive markets—small companies must continue to move products from Point A to Point B.

To keep productivity high and customers happy, some small businesses seek ways to cut shipping costs, including engaging third-party logistics (3PLs) providers. 3PLs' existing relationships with multiple transportation carriers often allow them to offer competitive pricing, and handle tasks such as shipment execution, tracking, billing, invoicing, and auditing.

3PLs don't just save small businesses money on the balance sheet. They also offer soft cost savings such as decreased labor, reduced need for working capital, and access to transportation management systems (TMS).

Decreased Labor

Even at small businesses, shipping departments often require several employees to operate productively and efficiently. Hiring a 3PL to handle shipping eliminates the need for multiple positions, bundling all the jobs into one system. 3PLs audit shipments or evaluate the shipping process for quality management, consolidating multiple invoices into one document. They can also handle claims management, and detect shipment problems.

In addition, logistics providers can settle claims for compensation, restitution, and repayment for damages suffered during the shipping process—all without the need for a claims management service.

Finally, 3PLs can provide transportation, warehousing, crossdocking, inventory management, packaging, and freight forwarding services, ultimately decreasing small businesses' labor needs.

Rather than outsourcing shipping to a 3PL, some small businesses improve operations by reorganizing their established shipping departments. In this case, 3PLs can integrate into the company's system to boost efficiency without sacrificing productivity. They work alongside existing shipping departments to combine order processing and e-commerce solutions with the transportation process, reducing administrative costs.

3PLs can also save small businesses time by researching carriers. Whether requirements are based on the size of the shipment, the time frame the company is working around, or the shipment's location/destination, 3PLs provide services to narrow the search to the most cost-effective option.

Improved Visibility via TMS

Many 3PLs offer TMS that give shippers the opportunity to take control of their own shipments at any time. For small businesses, trying to track shipments can be time-consuming and difficult—especially when using multiple carriers.

Third-party logistics providers often have the technology and resources to simplify shipment tracking. They provide real-time cost and transit time comparisons—along with immediate online access to invoices and bill payment—making it easier for small businesses to track and trace their shipments.

3PLs allow small businesses to focus on their core competencies rather than their complex shipping needs. Companies are then able to increase their soft cost savings while providing efficient, reliable shipping services to customers.