How a Third-Party Logistics (3PL) Provider Can Help Scale Your Business

Just like building a business from the ground up is never easy, scaling your business can prove just as challenging. You’ve got to worry about staffing issues, warehousing for all of your products, distribution and fulfillment costs, and more.

Scaling can be a daunting task for any business. With a third-party logistics (3PL) provider, however, scaling your business is easier than ever before.

In this blog, we’ll discuss the benefits of a 3PL logistics provider and how they can help scale your business.

What Does Scaling Your Business Really Mean?

Scaling a business means setting the stage to enable and support growth in your company. It describes a company’s ability to easily adapt to increased workload and market demands. A scalable company is able to benefit from economies of scale and can ramp up production.

Scaling a business mainly depends on both capability and capacity. Before you scale, make sure you’re ready. Ask yourself:

• Is my business capable enough to grow?
• Does my company have the capacity to accommodate growth?
• Is logistics a core competency of my business?

Miscommunication, orders falling through the cracks, and insufficient staff are all reasons that will leave you with unhappy customers.

Think 3PL When Scaling Your Business

3PL companies help implement systems and a distribution network strategy that streamline operations so you can focus on customer acquisition, building your brand, and product assortment growth. Finding the right 3PL is a crucial decision, and the success of your firm's operations rely on your choice.

For many companies considering partnering with a 3PL logistics provider, the process can quickly become overwhelming when you are met with hundreds of options to choose from. Few organizations will ever look the same in five years. It’s important that you have a handle on projecting your company’s growth trajectory and how the 3PL can align to your scaling business.

Benefits of Scaling With a 3PL

Access to Best-in-Class Technology

Here are four examples of how technology can improve visibility and reduce costs in your supply chain.

1. Carrier Selection
   A company’s logistics spend is an accumulation of countless daily decisions, with a common one being carrier selection. There are so many variables to consider when selecting the ideal carrier (service levels, cost, quality, performance, etc). Beyond that, you want a 3PL partner that will leverage carrier selection to meet your specific needs and build strategic partnerships that meet your growth goals.
   
2. Inventory Management
   Product inventory and materials management are the core of every supply chain. Having the right product in the right place is what keeps operations flowing, store shelves full, and customer orders fulfilled. A warehouse management system (WMS) enhances visibility (better visibility means better decision-making) and control by providing real-time information about inventory levels and locations.
   
3. Reporting and KPI Management
   Data is available and more usable with technology, especially when it comes to measuring performance. Using data, inefficiencies within a warehouse and throughout the transportation function can be analyzed with the goal of identifying problems and their solutions. Better access to data by way of technology also helps the process of establishing key performance indicators (KPIs) and managing vendor performance against those goals. Your 3PL should provide you real-time visibility to your supply chain, giving you the transparency needed to flex and scale your business.
4. Customer Service
   Logistics technology is a direct way to improve the quality of service to your customers. With better production planning, order monitoring, and transportation optimization through technology, you gain the ability to meet tighter delivery windows, increase customer inquiry response times, and operate with shorter lead times. The goal for any shipper, clearly, should be to leverage the best available and affordable technology that benefits their operations the most.

Better Flexibility

3PL companies have systems, networks, and processes put in place to handle more work in order to accommodate a company’s growth. They have the resources available to make changes and improvements to each aspect of your supply chain.

A 3PL gives you the ability to scale space (if in a shared campus environment), labor, and transportation according to your needs. Businesses with seasonal periods no longer have to stress over industry ups and downs and can utilize more space and resources when needed. Furthermore, using a 3PL allows your business to grow into new regions without barriers.

Ongoing Industry Expertise

A valuable 3PL logistics provider has focused experience where you need it within the supply chain. Because a 3PL has experience moving different products in many industries to and from all parts of the world, they can provide insight and knowledge that their customers may be missing.

The best logistics providers add superior value to your supply chain because “supply chain management” is what a 3PL does. Their diverse exposure and experience in managing supply chain movements is a big part of what they bring to their customers. The 3PL's experience, tools, and street-smart know-how contribute to that value.

Focus on 3PL companies that have experience in your vertical. A 3PL with experience in your industry will have a better understanding of regulations, similar order profiles, retailer relationships (including vendor scorecards and best practices), and inventory management. If they understand your business, they can be a partner who will provide proactive recommendations to continuously improve your supply chain.

Expand Customer Partnerships

One of the challenges to new partnerships is routing guide execution that can result in chargebacks, which are disputed transactions for failing to meet the shipping requirements of your customers. In most cases, chargebacks are occurring based on a lack of knowledge and accountability or inexperience of your 3PL with your business. Your 3PL should have a history with various retailers, so as you expand into new customer partnerships, your 3PL can help reduce onboarding timelines and remove the risk of excessive chargebacks.

Putting Scalability to the Test

One of the largest producers of non-GMO and gluten-free snacks was experiencing exponential growth. With this accelerated expansion, they shifted their focus to improving efficiency throughout their distribution network. The growing consumer packaged goods (CPG) company identified three specific supply chain goals to provide stability and a platform for continued growth:

1. Controlling transportation spend
2. Improving speed-to-market
3. Adding flexibility to packaging operations

Recognizing the growth hurdles that lay ahead, the company opened a bid to the market looking to partner with a 3PL that had the experience and resources to scale with their aggressive growth trajectory. The decision to select ODW Logistics as their 3PL partner was quickly rewarded with immediate and measurable improvement toward each of their three goals.

Ready to Scale Your Business?

If you’re interested in exploring how a 3PL can help your business prioritize growth and adaptability, contact the logistics experts at ODW. We have the flexibility to scale with your business demands and deliver a logistics solution to meet your cost and service needs.

Our team brings the experience, knowledge, and efficiencies to help your company scale quickly. We approach our customers in a consultative manner that helps them reimagine what their supply chain could look like. As your 3PL partner, we’ll help you gain visibility into your supply chain and guide you toward growth—delivering the data you need along the way.