Do’s and Don’ts of Outsourcing l Distribution to 3PL in UAE
If you own a business today, especially with e-commerce options, your business operations will heavily entail fulfilling customer orders through any of the distribution channels.
At some point, you may find it difficult and expensive to carry out order fulfillment in-house. So now, you’ll need to outsource your distribution process.
But to whom do you outsource? What are the benefits and drawbacks of doing so? Please read our guide to find out.
3PL (Third-Party Logistics) Pros, Cons, Use Cases
First, let’s review the benefits of outsourcing distribution using 3PL.
- Outsourcing to 3PL puts your business logistics in the hands of industry experts.
- You can easily transition towards global fulfillment. Working with a 3PL allows you to sell products across international borders and test fresh local markets as you tap into their experience and network.
- Instead of spending on redundant operations i.e., labor management, facility maintenance, etc., you can channel money towards other profitable investments and business functions for brand awareness and lead generation.
3PL also has its disadvantages.
- You’ll have to lose control, meaning that you would need to transfer the responsibility to the 3PL when hiring a 3PL service provider.
- 3PLs maintain their separate operation times and workflow processes.
A book publishing company focuses primarily on producing publications. Still, this business will entail customers ordering books and delivering the items to them.
So, the company employs an order fulfillment center and last mile delivery carrier. The fulfillment center and the transportation of last mile forms the D2C or B2C deliveries. Some 3PLs handle the customer ordering and delivery processes for the same as above.
Now we will move to find out some outsourcing distribution pros cons, and potential business applications;
what is third-party logistics?
When Should You Consider a 3PL?
- Costs of labor, staff, and facilities are steadily rising.
- You are running out of or don’t even have enough storage space for inventory.
- You’re having regular issues with complaining or dissatisfied customers, employees.
- Your company lacks the infrastructure to handle alternate rises and falls in product demand.
- Your business is starting operations in a new sales location.
Advantages of 3PL Third Party Logistic Services?
- 3PL services utilize a more extensive and expert distribution network and logistics than your in-house team.
- A 3PL partner helps your business save time and money on providing transportation, employing inventory staff, acquiring warehousing, etc.
- Using third-party logistics services frees your business to dedicate time and resources to its core services.
- 3PL providers guarantee a faster delivery response rate and more value-added services.
Gain Flexibility and Scalability
3PL services have two key benefits; flexibility in business operations and ease of practicing scalability.
It’s normal for business demand to fluctuate throughout the year or experience seasonal changes. With a 3PL provider, you can adjust the scale of your warehouse storage, investments, and production resources according to need.
8 Most Valuable 3PL Services to Look For
- Warehousing: storing business products.
- Order Management and Fulfillment: picking, packing, and shipping customer orders.
- Shipping Coordination: utilizing FTL (full truckload) and LTL (less than truckload) shipping according to shipment sizes, same-day and 2-day shipping for fast delivery.
- Inventory Management: real-time tracking of inventory stock, identifying ideal seasonal levels.
- Reverse Logistics (or returns) management: accepting and processing returned items from customers, examining products for damage and a possible return to inventory, and processing returned undamaged goods for re- purchase.
- Distributed Inventory: managing multiple warehouses, servicing various fulfillment centers.
- Data Analytics: offering data insights for improved business decision-making.
- Brand Customization: offering custom services like special packaging, branded gift notes, or adding brand name labels on shipped items.
B2B and DTC Fulfillment
B2B (business to business) and DTC (direct to customer) fulfillment are some other 3PL services. They allow you to establish business relationships with wholesale and retail enterprises or eliminate intermediaries in selling straight to customers.
So, the 3PL provider enables you to fulfill customer orders through online retail stores or your e-commerce web space.
International fulfillment is another third-party logistic service that helps businesses distribute products worldwide. Common global market challenges are longer delivery times and costlier shipping.
With 3PLs, you can ship products within foreign markets at domestic prices or pay less or no import taxes or shipping costs over time.
How to Choose the Best 3PL Company
Outsourcing distribution with 3PL supports your business only by choosing the right third-party logistics partner.
First, understand the logistics requirements of your business. Then, determine whether you need specific help or multiple services across your supply chain. You should still maintain an in-house team to liaise with any 3PL provider you use.
Make sure the 3PL company can offer the flexibility and scalability you may need in the future. For example, choose a company working across multiple locations. Also, when outsourcing in distribution industry, look for a partner that can shift from Traditional distribution channel to Modern distribution channel to Online distribution channel. This flexibility in one partner gives you a competitive advantage to fulfil any channel demand, all through the convenience of one partner.
Expert and experienced 3PL partners should have adequate feedback from clients that you can review. Confirm that your business will benefit from utilizing 3PL services rather than in-house operations.
Why Are Third-party Logistics Important?
The distribution outsourcing model of contracting a 3PL is vital for business operations in the following ways.
- Offering comprehensive external logistics
- Networking to expand customer base
- Exploring new domestic markets
- Improving customer experience
Looking for a Fulfillment Solution?
Finding solutions to distribution and order fulfillment can be critical to business success. That’s why you should use Al Sharqi’s Distribution Services as your 3PL partner.
Over 30 years of experience in the logistics industry shows evidence of our knowledge and continual innovation. With our intelligent technology solutions and expertise, you can grow your business.