3PLs are an essential part of capital efficiency. Here are 7 Ways 3PL can help to build capital efficiently.
Pay as You Go in Freight Transportation
You know what moving companies charge if you’ve shipped a heavy object. The cost of shipping depends on how much cash is being sent. For example;
When freight transportation is “pay as you go,”
- The customer pays a fixed cost per mile (or ton) plus any applicable tolls and taxes. Often, this rate includes fuel surcharges.
- The customer pays a fixed amount per net ton hauled minus applicable tolls and taxes. In this case, there may be a fuel surcharge component depending on the carrier.
Both approaches have advantages; however, today’s most common way is “pay as you go.”
Reduce Inventory Levels
Reducing inventory levels is a reliable way to reduce costs. Maintaining high inventory levels affects your company in many ways :
- A lack of space may be an issue. The inventory in your warehouse.
- Your cash flow will suffer because of the capital locked up in stock.
- Having more products than you need increases the risk of damage, theft, and loss.
- The risk of stale or obsolete merchandise increases as it sits on shelves longer.
The optimal inventory level varies depending on the product. But most companies want their turnover rate ) to be somewhere between two and three times per year. If this is too low for certain goods, then set it higher for those specific items.
Make Better Use of Your Warehouse Space
Here are a few things to note:
- Minimizing the amount of space your inventory occupies is critical. You may have no choice but to store some products that take up more space. The only way to accomplish this is to conduct an inventory breakdown.
- Optimizing how your warehouse is laid out will enable you to maximize its efficiency. Ensure your employees do not have to traverse long distances between picking locations.
Outsource to Get the Best of Both Worlds
Outsourcing is a great way to make the most of your resources and get the best solutions for your business. But it’s not a one-size-fits-all solution. There are various kinds of third-party logistics providers. Each offers services in different areas of supply chain management. Take a look:
- Full-service 3PLs: These companies provide most services needed in supply chain management. They can customize their offerings, making them flexible enough to meet specific requirements.
- Dedicated contract carriers: They focus on transportation. This can be useful if you want to expand your fleet.
- Freight forwarders: Freight forwarders can help simplify your international supply processes
Eliminate Inconsistent Carriers
Many companies have no idea what their actual transportation costs are. They often use multiple carriers to deliver their products. Delivery. A 3PL can help you estimate your transportation costs with greater accuracy.
Different carriers have different terms. By working with a 3PL, you’ll only be dealing with one organization for all your shipping needs. You won’t have to worry about lost shipments or delays caused by an inconsistent level of service.
Use a Web Portal to Automate Processes and Reduce Errors
A 3PL can significantly improve your company’s efficiency by providing automated web processes. Web portals offer companies the ability to keep track of their inventory. The web portal gives you visibility into your inventory and important notifications.
A web portal can also notify you when a shipment is in transit and give you an estimated arrival time. This allows you to better plan your orders. This will, in turn, help you to cut costs. Additionally, Web portals will enable you to track shipments in real-time. They give you up-to-date information about the location of your products. You can then use this information in scheduling and planning. This way, you will realize higher efficiency in the long run. Quick read!
Invest in Automation
The faster you can get products out of your warehouse, the more revenue you generate. Automated processes can handle more tasks than humans. So they can take large quantities of inventory much faster than people. With automation, 3PLs can generate more revenue without extra costs. This translates to a clear improvement in capital efficiency.
There you have it! Seven ways 3PL can help to build efficiency. The 3PL industry is growing by leaps and bounds. The best 3PLs will serve as a partner throughout the cycle, from sourcing to delivery. Pricing will be necessary, but it’s far from the only factor in choosing a 3PL. Don’t estate to leave a comment below.