Inventory Management

5 Factors to Consider when Choosing 3PLs

Simon Eskow 3PL Articles Leave a Comment

How you warehouse inventory can be a tricky proposition. Do you manage and run your own warehouse? Or do you outsource to a 3PL provider? Or do you do both? Where you hold your stock depends on your size, your growth, your budget and your channels. So what decisions do you have to make when it comes time to choosing 3PLs?

Choosing 3PLs, Owned-Warehouses or Both: What Makes Sense?

If and when to outsource your warehousing and logistics hinges very much on your business. What channels you sell through, your sales volume, your geographic market and more all play a part. So when it comes time to choosing 3PLs, here are some factors to consider.

Current Need

A lot of companies excel with consolidated operations. But what they need may hinge on what they sell, and how complex their supply chain is. For example, a fashion designer with a few employees can excel by managing their entire business in an office/warehouse. This is true, especially, with relatively simple supply chains with steadily growing sales volume through well-established channels handling a discrete number of SKUs.

Future Growth

What happens, though, when you begin to grow in volume, SKUs, channels and regions? At some point, you have to weigh the advantages of maintaining control over a warehouse against the demands of growth. Will your own warehouse meet the challenges of higher order volume, increased SKUs, or new overseas markets, for example? Choosing 3PLs (with the resources, scalability and geographic presence) may be the most cost-effective option to handle growtth.

Relative Costs

Owning/operating warehouses represents a capital expense, and in turn, an investment in directly managing your supply chain. Over time, though, a business has to weigh the expense of controlling that part of their supply chain against the cost of choosing 3PLs. For third-party logistics providers, though, the supply chain is their business. That mean weighing the relative cost of control against the cost of outsourcing to ready-to-go logistics experts.

Expertise and Resources

Small or simpler supply chains don’t necessarily need great expertise to manage a warehouse. Technology and processes, yes. But expertise and resources become critical, for example, when exporting, handling fast fulfillment or last-mile delivery, and for industry-specific specialization. Again, choosing 3PLs for expertise relieves business of having to divert expenses to essentially reinvent the logistics wheel.

Supply Chain Efficiency

The biggest consideration, perhaps, is how efficient can you make your supply chain. Can you manage your warehouse to get products out quickly and to keep pace with new volume? Can you handle global growth dispatching from your warehouse? The truth is, the answer is going to be different for every business. But choosing 3PLs, warehouses or both requires this careful consideration.

Cin7 Lets You Do Both

However you hold your inventory, Cin7 has you covered. Cin7’s warehouse functions and integrations with 3PLs around the world lets you do both. With Cin7, you can automate eCommerce orders for dispatch from 3PLs or your warehouse. And you can easily optimize stock in your own warehouse, track actual costs and so much more.

Start a FREE Trial

Leave a Reply

Your email address will not be published. Required fields are marked *