Outsourcing of Logistics Services: How Can SMEs Benefit from It?
Efficient management of logistics processes is key to business success for small and medium-sized enterprises (SMEs) operating in the European market. At a certain stage of development, every SME must ask itself the question: should it continue to handle the supply chain independently, or outsource these activities to an experienced third-party logistics (3PL) provider? Why does the latter option bring numerous benefits to small and medium-sized businesses, and what are those benefits? We provide the answers below.
Lower Operational Costs
Owning a fleet, warehouses, dedicated logistics staff, and technology for monitoring and optimizing these processes – all of this generates operational costs. As the company grows, these costs will only increase. Outsourcing logistics services and entrusting these operations to an external 3PL partner allows SMEs to avoid these costs, as the logistics service provider already has optimized infrastructure and resources for the most efficient operation.
Handing over all logistics operations to a 3PL company allows SMEs to focus on their core business (product development, customer acquisition, and brand strengthening) without bearing the increasing expenses associated with in-house logistics management.
Operational Flexibility
SMEs often face fluctuations or seasonality in demand for their products. There are periods when transport operations are more intense, while in times of business slowdown, they also decrease. This is where another advantage of working with a 3PL logistics company comes to the fore. An external logistics partner can adjust the scale of transport operations to match the current needs of the SME. A 3PL provider can quickly scale its resources, offering flexibility (e.g., during the pre-holiday sales surge or when the shipper is launching a promotional campaign) without the need for long-term investments in own resources.
Modern Technologies
For SMEs managing their supply chain independently, acquiring modern technologies can be a significant financial burden: transport management systems (TMS), warehouse management systems (WMS), and telematics systems for tracking load status. Maintaining the infrastructure, training staff, and keeping the systems up-to-date can also be costly. A 3PL partner already has such software (often developed by its own development team) and trained staff responsible for its operation. This enables SMEs to use advanced technologies without having to make large investments in their implementation.
Risk Reduction
Managing the supply chain in international markets comes with risks such as changing customs regulations, delays due to transportation issues, or unpredictable situations (strikes, natural disasters, cargo theft). 3PL companies, specializing in handling various European markets, possess the knowledge and resources to minimize these risks. Additionally, 3PL companies have gained experience over time in dealing with such undesirable situations and have developed plans and procedures to handle them when they arise.
Improved Customer Service
Customers expect quick and hassle-free order fulfillment. By outsourcing logistics operations to an external provider, SMEs can improve the quality of their customer service, as their 3PL partners are experienced in managing deliveries, ensuring timeliness and precision. Moreover, the entire customer service process related to transportation is handled by the 3PL partner, further relieving the shipper.
Outsourcing logistics also enables more efficient deliveries in various parts of Europe, which is especially important for companies operating in multiple international markets.
Outsourcing logistics services allows SMEs to reduce operational costs, increase flexibility, and take advantage of modern technologies without requiring large investments. By partnering with a 3PL provider, companies can focus on their core business while ensuring better customer service. External providers also help minimize risks associated with international supply chain management.
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