Let’s face it—good workers are tough to find right now. National unemployment rates are below 4% again. And though most of the people who sat on the sidelines in the early days of the pandemic have since rejoined the workforce, they’re not necessarily staying put. Many are jumping from employer to employer, looking for better pay and better opportunities. It is definitely an employee’s market.
That’s why many companies are turning to third-party logistics service providers (3PLs) to fill the gap. Third parties offer many advantages apart from easing the challenges of finding and retaining workers.
For instance, one of the greatest benefits of working with a 3PL is that you can leverage its expertise. Whether you’re using the 3PL for warehousing, transportation, or both, it has experience working with many different clients that can bring efficiencies, service improvements, and, often, cost savings.
Working with 3PLs also gives you access to the technologies they have in place without the need for capital expenditures. These are usually accounted for as operating costs and not depreciated, which may have benefits to cash flow. In addition, you can test-drive these technologies to see if they might be a good fit for another part of your operation without the hassles of conducting an internal pilot program.
Another benefit of contracting with a third-party provider is that it allows you to expand into new markets and possibly new countries without the expense of opening a company-owned facility. It enables you to scale and grow your business within the new market with less risk. Facilities that serve multiple clients, as opposed to single-client facilities, tend to have more flexibility and can accommodate seasonal fluctuations in demand. Multiclient warehouse operations also share the risk among their clients and can likewise share space on trucks, which can save on operational and transportation costs due to economies of scale. And they can often negotiate better prices with large suppliers and vendors as well as carriers.
Of course, possibly the most important benefit that a third party brings to the table is that it assumes all of the staffing headaches. If you own your facilities, a 3PL can still manage the operation’s staffing for you. It might handle all of the human resources tasks associated with employee recruitment, training, insurance, and retention, while minimizing the costs of employee churn, which in this age might be reason enough to look into getting a little help from some friends.
Gartner, Inc.
