Logistics Management Software vs Third Party Logistics
When businesses grow large enough to need shipping beyond their local area, they may encounter a pretty common dilemma: should they choose Third Party Logistics or 3PL or should they go with Logistics Software Solutions?
When it comes to making shipments that are too large to benefit financially from parcel shipping and too small to benefit from using a full truckload, small to midsized freight logistics companies look to third party logistics or 3PL. 3PL can help companies get the best deals on less-than truckloads or LTL shipping. 3PLs can also integrate shipping methods to reduce the delivery of products to retailers. The ability for 3PL providers to significantly reduce shipping costs through these methods make them the most popular choice among freight logistics.
What exactly is third party logistics? Third party logistics is self-explanatory: it’s the use of third-party companies to outsource various aspects of distribution, fulfillment, and warehousing services.
You might think you can’t go wrong by hiring a 3PL provider to reduce your company’s shipping costs and ensuring your goods are delivered on time. But there is a caveat. If freight logistics isn’t a part of your company’s main capabilities, then you will need to hire a contractor who specializes in providing logistics solutions. This is where logistics software solutions or logistics management software factor in. Third party logistics use logistic management software to handle your shipping solutions. Online logistics management software, however, allows you to act as your own logistics provider at a low, monthly cost.
The core difference between 3PL and logistics software solutions is the way logistics information is supplied, how much everything will cost, and how much control companies will have over the shipping process.
The good news about 3PLs is that companies that use a 3PL provider do not have to own its own warehouse facilities or transport facilities. This lowers the amount of capital for the client’s business. Companies with little or no logistics expertise can focus on their primary business while their 3PL handles the logistics for them. A 3PL can also cast a wider geographic distribution net.
The not-so good news is that businesses lose control by using 3PLs, as a 3PL provider acts on behalf of businesses, assuming communication and interaction with the firm’s customer or supplier. 3PLs will even apply their client’s logos on their assets and dress their employees as if they were employed by the client.
Using online logistics management software may be a better logistics solution. Logistics management software allows businesses to plan and implement the transportation, storage, and delivery of goods and services to the customer. Using online LMS allows a business to maintain complete control of their brand, avoid having to deal with a third-party’s business policies which could affect the pricing and/or availability of various shipping options.
If a company has personnel who has expertise in logistics and/or is willing to learn and operate LMS software, which is generally easy to use, then this would be a less expensive option, as it cuts out the middleman—the middleman being a 3PL provider.