What is a 3PL?
A 3PL (Third Party Logistics Company) is a non-asset based company (doesn’t own trucks or equipment) that can help you
- reduce costs,
- reduce risk
- save time and expense in the implementation of your logistics strategy.
Here’s how they do it….
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Huge rate savings… not really.
Generally, with a 3PL you’ll find the rates are competitive with what you’re already paying. Don’t expect huge rate reductions just because you’ve decided to investigate a 3PL. Rates are governed more by the market price and less about cost. Actually, if you’ve been collecting rates on your laneways for a while then you probably know much better what the market price is than a 3PL company. You should be sharing your rate information with your 3PL so they can work with you to put together a rate neutral package for you. You may be wondering; if a 3PL can’t get me rate savings, then what’s the benefit? The benefits come from mode shifting, order tracking efficiencies, time savings, consolidations, improved carrier management, shipment visibility and risk reduction.
Savings through Mode shifting
Problem: You are shipping a lot of regular LTL and want to know if consolidations are possible but don’t have the data.
Solution: By working with a 3PL you can leverage their computer tracking systems to observe patterns that would be candidates for consolidation into truckload shipments. For example, if you’re shipping twice a week 12 pallets from Chicago to Toronto, you would save considerable money by shipping one full truck load once a week. While this sounds simple, these opportunities exist in your shipping data. 3PL’s have software to find such opportunities and can help you take advantage of them. Anytime you can shift from LTL to truckload, your cost per pound will be reduced.
Savings Through On-time Reliability
Problem: You have to pay for expedited shipments because something didn’t go as planned, or keep extra stock to cover for “emergencies”. This cost money.
Solution: Leverage a 3PL’s software and expertise. The problem with many software packages that shippers use is that they end at their shipping docks. As soon as the truck is loaded, the order is complete. You know what really is important is a happy customer who receives your product on time. 3PL’s have software that’s designed to manage your shipments from your dock to your customers. Many offer ‘dashboard’ web access where you can see the status of any shipment you have on the go on one simple screen. Not only can you track all your shipments, but you can do it from anywhere. Because the majority of these dashboards are web based, you can do it from home, your Blackberry, even the golf course!
Time Savings, and Time=Money
Problem: You spend a lot of time qualifying carries and trying to enforce it with all your shipping locations through a routing guide. You know the struggle this is. On top of that, even if people are following it, plus, you consider all the time your people spend calling the carriers on the list to find someone who is available when you need them.
Solution: Your customer service people should be servicing your customers instead of looking for trucks. It’s that simple. A 3PL will take on this responsibility. You will always have a truck when you need one. The 3PL will take on the brunt of coordination between your plant, suppliers and customers, so your customer service people can do what their best at…. servicing your customers…. and taking orders!
Save Through Improved Carrier Management
Problem: You have a myriad of contracts, assessorial charges, fuel surcharge tables, insurances, licenses, etc. to keep on top of, and you’ve got piles of this stuff to keep up with.
Solution: 3PL’s generally have software designed to keep on top of all this stuff. Plus, they can help you negotiated standardized assessorial and fuel surcharges. This will not only save you time filing and collecting all this data, but think about the time savings in your invoice approval process.
Get Free Shipment Visibility Software
Problem: It could cost thousands, even hundreds of thousands of dollars to purchase, implement and maintain a software program that will track your carriers, rates, shipment status, performance metrics, etc.
Solution: With a 3PL you can leverage their technology for free. That’s right free. Most 3PL’s will be able to customize their software to your needs. You can get all the shipment visibility and reporting you need at no extra charge.
Save Through Risk Reduction
Problem: Many people don’t consider the risk they have when they load a shipment on a truck. Is that carrier safe? Is his insurance up to date? In today’s World traffic managers have to consider these factors. In recent court proceedings shippers are being held negligent and having to pay huge settlements to people injured in trucking accidents because the shipper did not conduct “due diligence” on the carrier chosen to ship their shipments. This is scary. In many organizations carrier selection is delegated to customer service people, or warehouse personnel loading the trucks. This is a recipe for disaster. There are very real risks here and these risks need to be managed and minimized.
Solution: A 3PL has the systems in place to collect insurances from carriers before they expire. To verify licenses and to check the carriers’s safety rating with the DOT. You can have all this done for free by using a 3PL.
In a nutshell: Why you should shift to a 3PL
- Savings from mode shifting
- Savings from order tracking systems
- Time savings from carrier selection and routing guide enforcement
- Free carrier management
- Free shipment visibility software
- Free carrier qualification service
If you’d like help implementing a 3PL model into your transportation network, call me at DSN.
Shipping LTL and Truckload, hazardous and non-hazardous shipments within North America for over 20 years.
Ask about other implementations we’ve done!
1-800-388-3487
www.chemicaltransportation.com
Chemical and hazmat trucks