April 2, 2024

Five Signs That Your Business is Ready for a 3PL

Five Signs That Your Business is Ready for a 3PL

As businesses grow, they inevitably reach a stage of development where logistics becomes too complex or difficult to manage effectively. Increasing complexities across inventory management, warehousing, order fulfillment, and transportation can quickly overwhelm an operation and drain a company’s resources. When this happens, it can be challenging to dedicate an appropriate amount of time and effort to revenue-generating tasks like sales, marketing, and product development.

A third-party logistics (3PL) partner can step in at this point to provide infrastructure, supply chain expertise, labor, and technology to help an organization free up its internal resources and regain control over growing logistics needs.

Are You Ready for a 3PL Partner?

Determining whether your organization has reached the point where you need logistics help may not always be cut and dry. Here are some signs you’re ready to look for a 3PL partner.

  1. No room left in the warehouse
    Whether you’re storing raw materials for production or inventory for retail and e-commerce sales, running out of space in your warehouse is a surefire sign that you’ve begun to outgrow your current logistics capabilities. And with warehouse rents at record highs, expanding into a new warehouse often feels out of reach for small- and medium-sized companies. Partnering with a 3PL allows a business to expand storage space as needed with demand—all without making massive upfront real estate, labor, and technology investments.
  2. Your vendor network has become too complex
    Inbound and outbound logistics don’t happen in a vacuum. As businesses expand, they find themselves inundated with contracts and relationships with couriers, truckload and less-than-truckload carriers, parcel carriers, suppliers, technology providers, and more. If your back office spends countless hours juggling orders, carrier assignments, invoices, bills of lading, and other logistics-related paperwork, those tasks can quickly overwhelm their other responsibilities. A 3PL takes much of that busy work off your plate, freeing up your team to focus on core competencies.
  3. You can’t meet customer delivery demands
    Consumers want delivery that is both fast and affordable, and businesses are quickly expecting that same level of service. A small, manual warehouse operation isn’t equipped to keep up with the changing delivery demand landscape. If your organization struggles to keep pace with same-, next-, or two-day delivery demands, you will benefit from some help. A 3PL already has those capabilities in place, which means you can provide more delivery options to your customers as soon as you finish onboarding with your new partner.
  4. Your inventory data is always inaccurate
    Most businesses start by taking manual inventory on a regular schedule using printouts on clipboards and entering that data into spreadsheets. Unfortunately, this process is extremely prone to human error, often resulting in lost sales or damaged customer relationships. Once a 3PL takes control of your inventory management, it can leverage its technology capabilities to give you a more accurate picture of your inventory on hand, which in turn will improve your forecasting and help you avoid stockouts.
  5. You don’t have the resources to expand into new markets
    Most growing enterprises don’t have the cash on hand or financing potential to expand into new markets. An e-commerce business needs to keep inventory close to large consumer markets. Similarly, manufacturers will want to locate finished goods in warehouses close to their largest customers so they can respond to changing needs. Using a logistics partner with a national warehouse footprint lets a business distribute its inventory across multiple strategic locations accordingly without buying warehouses in those markets. A 3PL with an industrial real estate arm further expands possibilities because it can more easily expand into new locations to suit changing customer needs.

Ultimately, determining whether your business needs to engage a third-party logistics firm will depend on a strategic analysis of your company’s goals, shortcomings, budget constraints, and capabilities. Exploring some of the areas outlined above can help you determine whether a 3PL is the correct choice for your business right now.

About Phoenix Logistics

Strategic Real Estate. Applied Technology. Tailored Service. Creativity. Flexibility. These fundamentals reflect everything we do at Phoenix Logistics. We provide specialized support in locating and attaining the correct logistics solutions for every client we serve. Most logistic competitors work to win 3PL contracts, and then attempt to secure the real estate to support it. As an affiliate of giant industrial real estate firm Phoenix Investors, we can quickly secure real estate solutions across its portfolio or leverage its market and financial strength to quickly source and acquire real estate to meet our client’s need.

As Senior Vice President for Phoenix Logistics, Mr. Kriewaldt oversees the company’s day-to-day operations as well as corporate strategic development. With more than 25 years of experience in the industrial real estate and logistics industries, Mr. Kriewaldt boasts extensive expertise in real estate practices as well as third-party logistics operations, contract negotiation, and new business development. Mr. Kriewaldt proudly fosters long-lasting business relationships by putting the customer first and creating mutually-beneficial partnerships for all involved. He also holds a Master’s in Business Administration from the University of Texas and a Juris Doctorate degree from Marquette University.

Frank P. Crivello is a Milwaukee-based developer and Chairman & Founder of Phoenix Investors.

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