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90% of U.S.Fortune 500 Companies Rely on 3PL Logistics Providers – And Why You Should, Too

Outsource to a 3PL

Posted on 06-08-2017 by Posey International

A new report that quantifies trends in 3PL customer relationships has been published by Armstrong & Associates, a supply chain consultancy.  Based on its analysis of more than 7,000 3PL customer relationships around the world, the report is named “Trends in 3PL/Customer Relationships – 2017,” and is a follow-up to the consultancy’s 2013 report.  The report’s findings reveal some interesting implications for how small businesses can benefit from working with a 3PL.

Why is the Report Important?

The report is import for a couple of reasons:

  1. 3PL use among Fortune 500 companies has increased from 46% in 2001 to 90% in 2017, which prompts the question, “why?”
  2. The reasons for the increase applies to 3PL customers of all sizes and types – not only to big businesses

Armstrong’s report explains that the increase “reflects how shippers continue to outsource logistics functions to 3PLs ‘in order to control costs and increase supply chain efficiency.’” The report also noted that “large companies use more 3PL services compared to smaller ones.” Also of importance, “one of the main takeaways from a shipper perspective when vetting a 3PL is to take a close look at what the 3PL’s technological capabilities are,” according to an interview with Armstrong’s chairman, Dick Armstrong.

So, to sum-up the reasons for the increase in 3PL growth among Fortune 500s:

  • Control costs and increase supply chain efficiency
  • 3PL technological capabilities
  • Large companies simply use 3PLs more than small ones

Why Working with a 3PL Makes Sense for Smaller Businesses

Working with a 3PL makes sense for small organizations for the simple reason that small organizations can benefit from a 3PL in the same ways that large businesses do.

  1. Control costs and increase efficiency. Every company – large and small – can benefit from implementing cost control measures and correcting inefficiencies in the business.  Because employees are the largest expense for any organization, small companies can take advantage of reduced payroll and related employee expenses by outsourcing logistics and supply chain work to a qualified 3PL.
  2. Take advantage of 3PL technology. Because 3PLs have made investments in technology, smaller customers can easily determine whether they are getting good results and value from the 3PL relationship, by simply reviewing their KPIs. Technology not only increases efficiency, but also can improve the quality of the results.

In addition to the benefits mentioned above, 3PLs can assist customers and add value in a variety of areas:

  • Domestic and international transportation management
  • Dedicated contract carriage
  • Warehousing and distribution

It’s easy to see that there really is no reason for a smaller business not to take advantage of the same benefits that large companies and Fortune 500s receive from working with a 3PL.

So, the outstanding question is: why handle these responsibilities internally, when dedicated 3PL experts are available and have the experience, resources and relationships to do this work for you, and usually for a very reasonable fee?

For questions about how you can benefit from working with a 3PL, be sure to contact the team at Posey: (713) 672-1985.  We’re available and look forward to discussing how we can help.

 

Source article for this post: Supply Chain 24/7, http://www.supplychain247.com/article/armstrong_report_points_to_continued_increase_in_3pl_usage_by_shippers/3pl