This question is similar to the own versus lease question common in many businesses or even on a personal level for that matter. The answer is, it depends. Factors like profitability, availability of capital, growth plans, the need for distributed operations among others will help determine whether or not hiring a third party logistics (3PL) company is right for your business.
Benefits of hiring a 3PL
Cost – in the short term, hiring a 3PL will save significant capital and expense. The 3PL company takes on the risk of significant warehouse space and outlay for Warehouse Management Systems (WMS), racking etc…
Expertise – 3PLs live in the logistics world. Warehousing, distribution, inventory management are all core competencies of 3PLs
Time – companies save considerable time by hiring 3PLs to manage their supply chain for them. This allows you to focus on your core competencies.
Scalability – companies that achieve considerable growth can easily scale through utilizing 3PLs.
Benefits of running your own logistics operation
Cost – in the long run, it might be more cost effective to run your own operation. There are many factors involved and must be determined on a case by case basis. Factors such as whether you lease or buy the property, what type of WMS you use, and the strategy of the company are a few to consider.
Control – This is probably the number one benefit of running your own logistics operation. If logistics is not a core competency of the business then you will need to hire personnel with the expertise.
Which one is right for you?
As stated earlier, every situation is different. Here at Spearpoint Logistics we obviously offer 3PL/4PL services but we would be happy to have a quick discussion with you in order to answer the question for your business. If the answer is, “you should run your own logistics operations,” we will tell you that as well.