Many retail and manufacturing operations that perform key supply chain functions in-house suffer from lack of resources to properly execute vital activities because of the substantial financial investments that are required. Outsourcing supply chain services to third party logistics providers gives businesses the ability to focus on primary functions that are core to their operations. Forming these business partnerships allows retailers and manufacturers to more easily expand operations while increasing efficiency and reducing costs.
Focusing on primary business functions also allows 3PL customers to further expand operations where they otherwise may have missed. This increases the operational flexibility and scalability of their business. Outsourcing to 3PLs can also help businesses to more effectively handle seasonal increases in volume, potentially increasing annual revenue.
Outsourcing to 3PL service providers also helps to reduce cash outlay related to infrastructure and technology. For many retailers and manufacturers these costs may not be justified depending on size of operation, but for 3PLs these technology elements are a necessity. This allows 3PL customers to save on these large initial investments.
3PLs utilizing automated data collection (ADC) technology when handling customer inventory realize additional benefits in relation to the efficiency of order fulfillment. These ADC tools allow 3PLs to streamline fulfillment activities, increase order accuracy up to 99% and reduce labor costs. Optimizing order fulfillment helps to ensure end consumers fulfillment expectations are met, increasing customer loyalty.
Many retailers and manufacturers outsource returns processing to 3PLs as well. This is just as vital as effective order fulfillment. 3PLs can utilize WMS technology to track orders back to their facility, remove products from packaging, disassemble and return to stock. Effectively managing this process can help to reduce returns processing cost and increase customer satisfaction with easy returns processing.
3PLs also supply customers with strategically developed shipping networks. With warehouses and distribution centers located in high volume areas, last mile delivery is much more effective. Many 3PLs utilize these facilities for crossdocking, where inventory can be received in bulk and broken down into smaller, individual orders with no storage time required. This helps to both reduce shipping time to customer and on-hand inventory costs.
Outsourcing services to 3PLs also helps retailers and manufacturers to reduce labor costs associated to general warehouse activity such as picking, putaway and order fulfillment as well as those associated to value added services. With the help of a functionally robust WMS, 3PLs can manage and track labor, making changes to achieve maximum efficiency.
To learn more about outsourcing supply chain services to 3PLs or required WMS technology contact Datex logistics expert.
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