Business operations are getting more and more complex by the day. Some companies have no option but to deviate from the traditional way of doing business to allow them to keep up with the demands of the market and the business as a whole. It is now common to outsource business requirements that are related to third-party service providers. This has resulted in the emergence of a set of businesses referred to as supply chain providers. An accepted and business standard resorted to by small business interest includes the involvement of third party logistics provider’s or also known as 3PL. These are cost-effective management options that are supplied by a third party. The company is freed of the necessity of hauling services in favour of having the services of a fulfilment that can handle storage and managing assistance operations as well as provide warehousing services.
There are specific states in the course running of the business where you need to make decisions on the need to increase storage area and product handling capabilities as a result of an increase in market demand. In circumstances where additional capital expenditure is not available due to the existing financial constrains position of the company, contracting fulfilment serves as a sensible option. It delivers the required capability with a fast turn around time that’s not achievable if the provider decides to expand with its own capital investment. A contract warehouse is a quick management alternative in cases where there’s an urgent demand for the storage area in response to a rise in market coverage. The good part about this arrangement is that you don’t need to make huge company adjustments to be able to deal with the expanded capacities. A service arrangement can be worked out between the company and fulfilment for the transportation, logistics needed for handling storage and movement of products along the distribution chain. The 3PL provides the facilities and the needed labour to operate the facility. Thus, in addition to relieving the company of the capital needs, the business will not be required to hire more employees for the operations and capabilities.
When you talk about your company needs with the service provider, they will take responsibility for the operations and supply the labour and logistical requirements. As an example, if you’re currently outsourcing the transportation of goods to your sales territory that is new, then the service supplier takes control of the storage area which will be required to set your control point of the additional sales territory. You don’t even have to acquire trucks to transport the merchandise because the 3PL company manages a fleet of delivery trucks.
You can choose to move the charging and collection of accounts to the third party as it might be cost effective to outsource the whole business performance cycle of the 3PL business. This relieves extra responsibilities of the business accounting and billing department since the 3PL company will be taking over the collection and billing responsibilities.