3PL in Sydney, also known as third-party logistics, is a specific supply chain management strategy. Basically, it involves the use of a third-party organisation as a method of outsourcing specific internal elements in order to streamline productive efficiency. Core functions like warehousing, distribution, procurement and fulfillment services can be revitalised with services in 3PL in Sydney. If the term is still new to you, make sure you read the following guide regarding the specs of how third-party logistics work and why it is useful.
The third-party logistics market has grown exponentially over the last six years. In 2014, the market was valued at approximately $75 billion and has since grown to around $157 billion in the United States alone (prior to the COVID-19 pandemic). The Australian market was forecasted to grow to around $187 billion (AUD), however, the impact of coronavirus on this industry remains to be seen.
Providers of 3PL in Sydney often specialise in a wide range of supply chain services. Their key role is to integrate warehousing and transportation services into wider production activities, while remaining cognisant of customer needs, market conditions or other environmental blockers inhibiting delivery services.
Given the fact that many businesses have been forced to revert to delivery services because of social distancing requirements, delivery services and supply chain efficiencies have grown in importance. Here are some of the most common and credible benefits of developing 3PL in Sydney for your business:
Third-party logistics are great for bolstering flexibility, both geographically and physically. It allows companies to provide their goods to clients and markets they couldn’t otherwise provide without external help. Likewise, if you were to have your goods delivered via private couriers or postal services, you would likely be hit with some rather exorbitant fees.
Thankfully, third-party providers benefit from “zone skipping”, which shortens the distance between the distribution centre and the customer, resulting in decreased shipping costs. On top of this, business owners can more easily manage and predict their fixed and variable costs, along with their overall workforce size and capabilities.
Furthermore, services in 3PL in Sydney can drastically minimise your internal costs and reduce the amount of capital you need to deploy in order to operate your business. What does this mean specifically? Well, you won’t necessarily need to finance large transportation or warehousing facilities. This is particularly effective if the company’s warehouse is prone to extensive fluctuations in capacity utilisation. Overbuying stock is one of the biggest profit killers in the industry.
Naturally, services in 3PL in Sydney will ensure that your internal production team has more time to focus on endemic problems relating to production, as opposed to distribution concerns. Third-party logistics providers are equipped with all the current and most up to date tech and IT systems in the industry. Because of this technology, many providers can tap into extensive global networks, enabling them to provide their clients with both time savings and cost reductions.
The final benefit of using 3PL in Sydney is the fact that it can help business managers and strategists to focus on their core functions. Outsourcing your logistics processes to an external provider allows business with less capital and expertise to focus in on their core services. More importantly, it allows them to focus their attention on profit drivers, as opposed to diverting attention, resources and capital to other business areas that don’t bring about the same level of profit or performance.