Sales and Fulfillment
The role of 3PL outsourcing in international expansion
Are you a retail business operating in the domestic market but with aspirations for global expansion? If so, your current in-house logistics setup, which includes transportation, warehousing, and technology, may not be equipped to handle the complexities of international trade.
Global logistics faces risks that are often out of your control. For example, the unforeseen blockage of the Panama Canal and the attack on a cargo ship by Houthi rebels caused significant disruptions. Global businesses need to adapt to such risks quickly and have cutting-edge analytics and tracking systems.
This is where third-party logistics (3PL) outsourcing helps you experience growth, drive efficiency, and have a cost-effective solution. According to research, the 3PL market is set to grow from $1.2 trillion to $1.8 trillion between 2021 and 2026 at a CAGR of 9.2%.
This article discusses the challenges of in-house operations and the ways in which 3PL helps you expand globally.
The challenges and burden of in-house operations
Traditional retail and e-commerce businesses try to manage every aspect of logistics in-house. This includes warehousing, transportation, supply chain management, systems and technology, and analytics (if any).
They rent or own warehouses, hire staff for each of the processes mentioned above, either develop or pay for expensive third-party systems and software and handle shipping logistics themselves. However, as the logistics industry expands and faces newer challenges, this approach can be overwhelming. In-house logistics require significant capital investment, stop you from getting international market outreach, and require constant focus, which can be exhausting and prone to errors.
3PL outsourcing provides significant relief from these in-house burdens, allowing you to focus on your core competencies and business growth. This brings us to the ways 3PL can help you expand globally.
How does 3PL help you expand globally?
Global supply chain management and market expansion require a paradigm shift in the way you currently handle logistics. Here are some of the ways 3PL services can help you expand globally –
Efficiency and cost savings
By outsourcing to a 3PL service provider, you immediately save a massive capital investment, which you can redirect towards capturing international markets and marketing. You get access to top-notch capabilities while achieving the cost savings necessary to generate liquid cash.
Better supply chain management
As we discussed above, global supply chains are impacted by events beyond a single company’s control. These include geopolitics, wars, blocked trade routes, pandemics, and so on. 3PL service providers optimise supply chains, enabling a seamless flow of goods. External partners can do this because they already have robust primary, secondary, and tertiary channels that keep the business running even during disruptions.
Access to global logistics networks and customer markets
3PL service providers are already connected to extensive global networks, which can be a launchpad for you to expand into global markets. Forming these connections on your own can be expensive and time-consuming, with no guarantee of success. These global networks include transportation modes, local partners, and distribution centres for international expansion.
Focus on core competencies
By outsourcing logistics, you have the time and resources to focus on core competencies. These include product development and refining, marketing, branding, and customer service. By spending more time on core competencies, you improve product quality, thus building customer experience and loyalty.
Scalability and flexibility
External agencies give you the flexibility to scale up or down with seasonal peaks and troughs. When you work globally, these peaks and troughs may overlap and change according to the geographic location. Managing these moving parameters and efficiently running logistics can be extremely challenging in-house.
Consolidation of logistics and cost-effective shipping
A single 3PL service provider that can consolidate the product portfolio and geographical locations under one umbrella gives you a massive competitive advantage. Not only do you reduce shipping charges, but you also consolidate plenty of smaller packages to be delivered in a logical sequence that saves time and fuel.
For example, a 3PL service provider delivery algorithm looks at the addresses where the product needs to be delivered, maps them on a satellite navigation system, and creates a delivery map that the vehicle must follow to save time and fuel. The algorithm also arranges the delivery items inside the vehicle in a logical sequence.
How can Infosys BPM help?
The cutting-edge 3PL services at Infosys BPM help you address challenges of tracking and maintaining assets, activity-based billing, management of DSO, adoption of technology, and so on.
Read more about 3PL logistics outsourcing at Infosys BPM.
