In the ever-growing business landscape, companies are using Third-Party Logistics (3PL) providers more and more to streamline their supply chain and logistics operations. Outsourcing these services can increase efficiency, cost savings, and improve focus on core business activities. However, one crucial aspect businesses must navigate is understanding and calculating the costs associated with 3PL services. So, today, we’re going over what goes into determining 3PL costs and what you put into a 3PL calculator when it comes time.
Let’s get started!
1. How Much and How Heavy:
First, one of the primary factors influencing 3PL costs is the volume and weight of your shipments. 3PL providers often offer tiered pricing, where the cost per unit decreases as the volume or weight increases. Thus, accurately assessing your shipment quantities and weights is essential for obtaining precise cost estimates.
2. Services You Need:
Different businesses have different logistics needs. So, the level of service your business requires, such as order picking, packing, or labeling, will impact overall costs. Whether it’s full service or part, there are multiple choices. Therefore, you should communicate your specific requirements to the 3PL provider or 3PL calculator to ensure accurate pricing.
3. Getting Products from Here to There:
Next, you will have to consider the transportation component of your supply chain. So, distance, shipping method (ground, air, sea), and destination contribute to transportation costs. Understanding these variables will help estimate this critical aspect of 3PL expenses.
4. Warehousing and Storage:
If your products need a home, warehousing service fees come into play. Some of these warehouse services include factors like storage space, handling fees, and inventory management, which all play a role in determining costs. Therefore, you must evaluate your storage needs and discuss them with the 3PL provider to comprehensively understand warehousing expenses. If you are a growing business and need to get your products out of your garage (or wherever you hold them), this is an important thing to look into.
5. Technology and Integration:
Moving forward, the level of technology and integration with your systems is another consideration. Some 3PLs offer advanced technology solutions. While these can enhance efficiency, they may also impact costs. Therefore, you need to determine the level of technology alignment required for your business operations. These can help streamline your operations, so it’s helpful to look into the types of tech warehouses and 3PLs have to offer.
6. Customs and Duties:
For companies involved in international trade, customs clearance and duties are significant cost factors. Be sure to account for these expenses if your supply chain involves cross-border shipments.
7. Contract Commitments:
The length of your contract with the 3PL provider can influence pricing. Thus, longer-term contracts may result in better rates in the long run. So, once again, carefully evaluate your business needs and consider the optimal contract duration.
8. Special Treatment:
If your products have unique requirements, such as temperature-controlled storage, communicate these specifics to the 3PL provider. Specialized services may incur additional costs but are essential for meeting your product’s needs.
Looking for a 3PL?
If you want to outsource some or all of your fulfillment to a 3PL, there are many different resources to help, including 3PL calculators. However, if you want to find the perfect 3PL match, then eHub might do the trick. eHub analyzes your business and needs and matches you with the ideal fulfillment partner so that you can take the guesswork and difficulty of outsourcing. So, if you want to take the first significant step in finding the perfect 3PL provider, we’d love to help you!
In conclusion, understanding and calculating 3PL costs is a nuanced process that requires careful consideration of various factors. Working closely with your 3PL provider, providing accurate information, and exploring multiple quotes from different providers are essential to making an informed decision. By navigating these aspects effectively, businesses can unlock the full potential of 3PL services, achieving greater efficiency and cost savings in their supply chain operations.