3PL Vs In-house Logistics: Differentiation
3PL Vs In-house Logistics: What is Better?
A business strives for optimization in day-to-day operations and improvisation in customer service. This has led the management to focus on mitigating operational costs and increasing the supply chain’s visibility.
Customers are now abandoning their shopping carts based on the shipping experience. If a business takes more than two days for delivery, the customers tend to switch to the next e-commerce website. According to a report by Clutch Logistics Survey 2019, 45% of shoppers are unlikely to buy again if the item is delivered late.
Various companies are opting for different delivery models for their customers to fulfil the customer-centric market. Some of them opt for in-house logistics while the remaining choose third-party logistics providers (3PL) for their delivery services. These two delivery models are popular among various big corporates while some are also choosing fourth-party logistics (4PL). You can read about the latter one here.
Let us understand the basics.
What is In-house Logistics?
When a business opts for in-house logistics, it manages and monitors all logistics operations including warehousing, transportation, and delivery of all its goods. Such companies have their own warehouses and fleet of vehicles to manage their delivery infrastructure.
If the companies have enough money, they usually have in-house logistics as they can hire the required logistics managers and personnel. However, the question lies that is in-house logistics the best option for a company.
Is in-house logistics A Better Option?
With in-house logistics, a company needs to do its internal fulfilment. Let us look over the benefits and disadvantages of in-house logistics.
Benefits
• Tailor your supply chain with your own preference
A company can utilize its warehouse as per its preference. It can eliminate the requirement to adhere to the standard processes and customize the complete logistics process. Additionally, it can audit its warehouse whenever required.
• Personalized touch
Most 3PL companies do not provide personalized packaging to their clients as it becomes more tedious to manage the supply chain.
• Optimize Customer Experience
When you have your own in-house logistics, a company can optimize its customer experience and directly communicate with its buyers. A 3PL company might not address customer issues. In this case, with in-house logistics, a company can cater its services as per customer requirements.
Cons
• A big investment
A startup or small business needs to rent a warehouse and deploy complex digital infrastructure to streamline its logistics operations. Moreover, they require insurance to avoid unfortunate circumstances. In addition to this, a company needs enough funds to maintain its intelligent systems. In-house logistics can slow down the path of profitability of a startup or small business that is on the customer acquisition spree.
Now, let us look over the other side.
What is 3PL?
3PL refers to the outsourcing of logistics services that provide a plethora of services including picking, packing, labelling, inventory management, fulfilment, and dispatching of goods. A 3PL partner not only works with specific industries but caters to various verticals including IT equipment, pharmaceuticals, cosmetics, raw materials, apparel, and sports goods.
Why Hire A 3PL company?
• No Digital Complexities
3PL companies have excellent software and utilities in place to take care of the real-time monitoring of parcels. They have integrated various platforms to monitor the inventory and provide alerts in case of low stock levels. A 3PL partner will help with the routine checks that include quality control and provide visibility to a startup regarding the supply chain.
• Managing Regulatory Changes
A product-centred company must comply with various regulatory changes and trends to smoothen its supply chain. However, if these regulatory mandates are not addressed, the company needs to channel its resources to take care of the jeopardy. For instance, if you’re a company working in the pharmaceutical or nutraceutical industry, you need to ensure that all warehousing regulations are met.
• Flash-light Delivery
A 3PL partner has a vast network that enables them to provide a last-mile delivery. They partner with multiple-delivery partners to provide delivery to the required pin code. Moreover, it reduces the cost of delivery as warehouses are strategically placed across the market. This indeed improves customer satisfaction as they can receive delivery before the stipulated time.
• Focus on the Core
When you hire a 3PL company, the company can focus on its core operations rather than focusing on the logistics part of the business. A 3PL partner assists in surmounting the logistics obstacles and does provide services to strategically manage the inventory.
Various companies even due to the presence of the large cash flow prefer 3PL due to its unique benefits. For instance, big corporates such as Amazon, Flipkart, and BMW have hired 3PL partners for their services.
• Expansion becomes easy
A prominent 3PL partner understands your business. For instance, an e-commerce company receives a high volume of orders during the festival season. In this case, the 3PL company will help you to fulfil the orders without disrupting the supply chain with help of advanced systems that help them to track the inventory levels and provide online platforms to monitor their supply chain.
Cons of Choosing a 3PL partner
• Lower Control
Companies have lower control over how their 3PL partners run their supply chain. They need to follow their standard protocol and adhere to their policies. If a problem arises in the supply chain, you might not get immediate access to your 3PL partner. Moreover, if your company carries vital information with the packages, a data breach due to a 3PL partner can your company to land in a vulnerable spot.
If you look over the pros and cons of having in-house logistics and 3PL, there is clearly a winner.
Upscale your Logistics Journey with WareDepot
WareDepot will help you with all warehouse fulfilment services. The company caters to various industries including retail & FMCG, automotive, IT, and e-commerce among others. WareDepot not provides inventory management and distribution of goods but also provides personalized services such as branding and creating marketing promos for the companies. It has a presence in all Tier-1 and Tier-2 cities and expanding exponentially to serve its customers. Some of our customers include Pigeon (a house appliance brand), Vodafone (a telecommunication company), and Myglamm (a cosmetics company).