In traditional business models, the supply chain is generally viewed as a cost centre. As such, one of the main reasons for partnering with a third-party logistics (3PL) company is to reduce costs. By outsourcing all or part of your supply chain to a 3PL who specializes in executing supply chain logistics, the company reduces the costs of doing the same thing in-house.
Of course, reducing costs is crucial for every business. But, considering the new realities of the supply chain, it may be a mistake to marginalize the role a 3PL can play in your operations to merely reducing costs.
How You Reduce the Advantage of a 3PL by Only Considering it as a Cost Savings
Again, there’s absolutely nothing wrong with lowering your costs. But here’s how considering only lower costs when working with a 3PL can reduce or potentially eliminate the some of the advantages they offer.
The Commoditization of the Supply Chain
When your focus is mainly on lowering costs, even in your partnership with a 3PL, it levels the playing field for your competitors.
How So? Every business understands the critical nature of cost reductions. In simple terms, unless you develop an entirely new, proprietary process that everyone else has failed to discover so far, it’s very difficult to compete largely on cost reductions. Your competition can find and use the same reductions.
In the end, you company spends an inordinate amount of time and resources on lowering costs, which ultimately can be matched by competitors. And that erodes the company’s ability to keep its eyes on other ways to differentiate itself and improve the bottom line, including customer service, marketing and sales.
How a Third-Party Logistics Company Help Set You Apart in the Marketplace
When you partner with the right 3PL, not only do you save money, but you give your business the chance to refocus in a number of areas.
- Instead of focusing on lowering the costs of many different functions, refocus on taking advantage of integrated processes, data and business intelligence
- Instead of focusing on order taking, refocus on your customers (the orders will come)
- Instead of focusing on shipping and transportation, refocus on delivering (what the customer doesn’t get anywhere else)
- Instead of focusing on inventory, refocus on positioning your product and increasing its availability
- Instead of spinning your wheels trying to ship accurate, timely and complete orders, accelerate your business by getting more orders.
Want to learn more? Contact us here at PiVAL.