3PL vs. In-House Logistics: Which is the Right Choice for Your Business
What Is 3PL?
3PL (third party logistics) is a fulfilment service provider that helps businesses grow by handling packaging, shipping, and inventory management. By helping with packaging, shipping, and product organisation, 3PL logistics companies help you simplify your business. Although these companies only charge a small fee, they may save you the significant expenses of recruiting and supervising skilled workers.
A 3PL provider may solve space concerns and save costs rather than you expanding your fulfilment warehouse to fit more goods. Now that we understand the basics of 3PL, let’s explore its key benefits and drawbacks.
Advantages of 3PL
3PL serves to give lots of advantages. The following are some of the advantages of 3PL services:
Low Cost
One of the key benefits of hiring a 3PL provider like Prolog Fulfilment is cost savings. They reduce expenses related to shipping, packaging, warehouse space, and staffing-all for a reasonable fee. This factor is essential for small businesses to increase their product and packaging quality without high costs. This way, they can be renowned for their excellent quality packaging without spending much money.
You should also know that packaging, shipping, stocking, and organising are more hectic than they sound when you are doing all by yourself. Hiring the best 3PL providers helps you to manage this complex process without breaking your bank account.
Scalability and Flexibility
Hiring a professional 3PL provider like Prolog Fulfilment gives your business the flexibility it needs.
3PL providers offer flexibility and scalability by resolving warehouse space challenges. Businesses that work through in-house logistics often feel the need to increase their warehouse space, which is quite a headache. But with top-notch 3PL providers this won’t be a problem!
Specialised Expertise and Technology
3PL providers give you access to cutting-edge technology and skilled professionals. Hiring individual employees yourself and buying these modern technologies can cost more than the entire fee of third-party logistics. Due to the modern technology that 3PL providers possess, they make sure to avoid any mistakes along the process.
When it comes to their expertise and professionalism, they record every shipment they do and know what is next to be done. This eliminates the chances of errors. Avoiding these mistakes is essential to maintaining your brand’s quality and earning customer trust.
What is in-house logistics?
In-house logistics refers to the management of a company’s supply chain, transportation, inventory, and distribution processes internally, without outsourcing to third-party logistics (3PL) providers. This means the company handles warehousing, shipping, order fulfilment, and supply chain operations using its own staff, equipment, and infrastructure.
Disadvantages of In-House Fulfilment
Instead of hiring a 3PL provider, businesses can choose to manage logistics in-house. The following are some disadvantages of in-house fulfilment:
High Going Costs
When you do the packaging and shipping work yourself, you have to face high costs like extending the space of your warehouse, hiring more employees that require higher salaries to be paid, or utility bills because of the high power-taking technology. These costs can quickly add up, but a 3PL provider like Prolog Fulfilment can help reduce them.
Requirement for Expertise and Professionalism
When you manage things yourself, it can be troublesome. However, availing yourself of the expertise and professionalism of the 3PL workers can help you a lot. They package and ship the products and utilise technology that makes their work easier and quicker. In the past year, 79% of 3PLs have reported increased profitability, and 33% have reported strong profitability growth of more than 25%.
Which is the Right Choice for Your Business?
3PL
Struggling with slow order fulfilment and delivery delays? 3PL providers have sped up shipping by establishing last-mile delivery services and warehousing networks. Choosing the right 3PL provider is crucial, as it directly impacts operational efficiency, customer satisfaction, and supply chain performance. A 3PL supplier offers a wide range of services to meet the specific needs of businesses, including order fulfilment, shipping, storage, and logistics management.
When selecting the best 3PL provider for your organisation, you must consider a variety of factors, including service offerings, technological capability, industry understanding, scalability, and price structure. Over the last ten years, the worldwide 3PL business has expanded, and in 2020, its revenues totalled 961.8 billion dollars.
Unilever is a well-known example of a company benefiting from 3PL solutions. To improve its logistics and supply chain operations, Unilever teamed up with the top 3PL suppliers of DHL Supply Chain, a worldwide consumer products corporation.
In-House Logistics
Struggling with high upfront costs & ongoing expenses? Internal logistics management enables companies to have more control over their supply chain via customised procedures and hands-on supervision. In-house logistics refers to the management of all aspects of a company, including distribution, transportation, and inventory control. The Office for National Statistics (ONS) expects that, alongside the transport sector, the UK logistics business will become the country’s fastest-growing industry.
Companies with customised solutions, sophisticated distribution systems, and specific product requirements might find tremendous advantages in this approach. Through internal management of logistics, companies may rapidly apply their plans and react fast to changes in demand or market circumstances. This ensures that the logistical strategies complement the general goals of the company.
Companies must invest in training and hiring skilled personnel to oversee logistics operations, which can be time-consuming and costly.
One outstanding example of a corporation managing its full supply chain internally is Zara. They have a brilliant business strategy that helps them react quickly to fashion trends; fresh items arrive in stores twice a week. Their highly automated distribution hubs in Spain, which follow tight inventory and quality criteria, result in fast replenishment and increased customer satisfaction.
Understanding Real-life Situations: How Do 3PL Logistics Help to Boost Your Business?
One online retailer, known for offering quality pet products, needed help with fulfilling 33,000 Advent calendars for Christmas 2024. They faced issues with their original vendor, who couldn’t meet production standards and had quality problems. To fix this, they turned to Prolog Fulfilment for help.
Prolog Fulfilment took over the entire process, ensuring the Advent calendars were produced on time and to high-quality standards. They carefully assembled the calendars, performed thorough quality checks, and streamlined the production process. By doing this, Prolog Fulfilment managed to complete the order and deliver all 33,000 Advent calendars on time. They also avoided delays that could affect the Christmas season sales.
As a result, the retailer’s campaign was a success, with high-quality Advent calendars delivered on time, customer satisfaction boosted, and a system in place for future campaigns.
FAQs
What is the difference between 3PL and In-house logistics?
3PL involves outsourcing fulfilment, warehousing, and transportation to an external provider, while in-house logistics means handling these operations internally.
How can I reduce my costs with a 3PL?
3PL companies use methods like bulk shopping, optimised transportation and shared warehousing to reduce logistics cost for your business.
Can I use 3PL and In-house logistics together?
Yes, of course. Many businesses opt for a hybrid model to manage their logistics. For example, Amazon manages its own logistics operations, but also uses 3PL for deliveries in some areas.
Is In-House logistics only good for bigger businesses?
In-house logistics is mostly used by bigger businesses which have more resources and investments. However, smaller companies can also develop in-house logistics with gradual scaling.
Can 3PL help improve my delivery service?
Yes, you can improve and make your delivery services faster with 3PL in most of the cases, because they have wider networks and more accessibility.
