Third Party Logistics: A Shipper’s Best Friend

You know how to run your business.  You know all the ins and outs of your product or service, and your entire team knows what it takes to manufacture, maintain, and/or sell that product.

But when it comes to the supply chain, there are a lot of intricacies that aren’t quite the same as what it takes to develop what you sell.  Carriers, rates, shipping lanes, documentation, laws, tariffs, insurance valuations – these things all add up to a major headache.

Your shipping department is aware of this and spends their entire day managing it.  In some cases, the logistics department is aware of the items but they decide to just “keep doing what we have been doing”.  After all, if it isn’t broken, why fix it?

They have to review received shipments, distribute the received goods, pack the completed items, print labels, and ensure everything gets on the truck to be shipped out. 

"Shipment that needs to be expedited"  They have to look it up. 

"Shipments that require special handling"  They have to look up the carriers that can accommodate that.

There’s a smarter way for your logistics team to work.

Why wouldn’t you hire specialists to work for you?

Managing the supply chain is a complex process.  Why wouldn’t you take advantage of specialists who do nothing all day, every day, handling everything top to bottom about supply chain management?

Think about it.

Payroll – The easiest question would be, who does your payroll, Paychex or ADP? One of these big players handles the payroll for most companies, as well as direct deposits, tax withholding, and other complex aspects of managing payments.

Why do companies outsource payroll?

Simple – because they went into business to create something and sell a product.  They did not go into business to hire 2 people to manage payroll.

It is more cost-efficient to outsource payroll than to do it in-house, period.

You hired an electrician to wire your building for the machines you need to manufacture your products.  You probably outsourced your IT management to a specialized firm as you grew, at least until you were large enough to hire someone to keep on hand.  When it comes to your phone bill, you probably hire a specialty telecom expense management company to audit that you’re getting the best deals on your contracts.

Outsourcing specific, niche tasks to specialized companies makes sense at a certain size.  Your team can’t keep up with the intricacies of telecom laws and personal connections to the big telcos – but a company that specializes in that does.  You may have an IT guy (or girl) on hand, but if you have a security issue or need a special app designed, you hire a specialized business for that.

Supply chain management is one of those specialized niches you should have experienced working on for you.

A team is better than a single person, and a team of experts is better than a team that only ships freight part-time.

That’s not to say your shipping department isn’t great at what they do.

But they don’t spend their entire day managing freight in the most efficient way possible.  They haven’t spent decades researching and building relationships with carriers.

And no matter how big your business is, most clients don’t ship enough freight to be able to negotiate the same rates that a 3PL can.

Rates are just the tip of the iceberg.  Insurance valuations for claims, item exceptions with exclusionary reduced RVNX allowances (if you don’t know what that means – then that’s an excellent point for why you should utilize the services of a 3PL, such as Diversified Transportation Services).

Even with a $50,000+ yearly budget for freight shipments, you’re not managing the thousands of shipments that an experienced, established 3PL manages.

It’s that experience and that bulk that makes working with a 3PL so beneficial for your business.  They can get rates your team just plain can’t – they don’t have the purchasing power to negotiate the same rates.

There’s also scientific data that supports how successful shippers find working with 3PLs to be.

The 2017 annual Third-Party Logistics study showed that 75% of shippers said that the use of 3PLs contributed to overall logistics cost reductions.

Cost reductions can come in a variety of ways such as:

• Lower rates (that is an easy one)
• Better insurance coverage or a solution to reduce your current risk when shipments move
• Reduced administrative time – this is one that most shippers never calculate in their cost savings analysis. This consists of negotiating rates, keeping on top of the best-in-class technology to implement regarding supply chain management, LTL rules and policies that are always changing, and more.

Additionally, 73% of shippers said that 3PLs offer new and innovative ways to improve logistics effectiveness.

In short, if you’re not using a 3PL, your competition is – and they find that using a 3PL is benefitting their business in a major way.

Using a Third-Party Logistics Provider is How Your Business Remains Competitive

It’s not just a question of ease or lower cost; utilizing the expertise of the right 3PL can give you a major leg up over the competition.

The same study that found the distinct advantage in cost and effectiveness also found that 86% of shippers said the use of a 3PL contributed to improved customer service.

Using the right 3PL means that your customers are happier with your business, and that means more repeat business – and more referral business.

That all hinges on which 3PL you decide to work with, though.  An average or sub-par 3PL isn’t going to be any better than handling the supply chain management on your own.  You need a 3PL with experience and a focus on your business’s needs to see the differentiation between your business and your competition.

At Diversified Transportation Services, we pride ourselves on doing more than simply providing the absolute cheapest rate for our clients.

We help clients find the carriers that will best meet their needs – whether they need expedited shipping, specialized equipment such as drop decks or RGNs, oversized equipment to be moved, just-in-time logistical needs, high-value insurance coverage on specific shipments such as those that are up to 1 million dollars, refrigerated or heated trucks, or if they need to consider additional factors when selecting the carriers for their shipments.

We’re here to help your business grow. 

If that’s what you’ve been looking for in a third-party logistics provider, let’s talk.  Click the button below or request a call from our team at 310 521-1200 – and let’s find out how we can improve your logistics management.