The goal of every business is to achieve growth and maximize its profits. But as the company expands, so do the operational difficulties. Many businesses find themselves in need of additional personnel and resources like space and storage. While these are all pressing issues, a major one that affects client satisfaction and, in turn, company growth is logistics operations. With studies anticipating the global logistics market to reach 18.23 trillion USD by 2030, businesses' central question is whether to choose a 3PL logistics partner for their operations or do it independently.
Difference between own and 3PL logistics
Before deciding on whether to run your own logistics operations or choose 3PL logistics, it is crucial to understand the difference between the two.
In-house or own logistics management refers to the planning, monitoring, and execution of all logistics activities and procedures by a company. The company owns all assets for the logistics operation like vehicles, drivers, etc., and internal management oversees all supply chain processes like inventory management, warehousing, route planning, delivery, etc.
Advantages of self-owned logistics
Though self-owned logistics may seem like much work, it offers certain advantages, including the following:
3PL logistics provider
3PL logistics service providers are external companies offering businesses specialized logistics and supply chain services. They handle all aspects related to logistics management so businesses can focus on core operations.
Advantages of 3PL logistics
Partnering with a 3PL logistics provider offers numerous benefits to businesses, including the following:
How to choose the right one
The choice between owning logistics and partnering with a 3PL logistics provider depends on various factors.
Smaller businesses with limited resources may find that outsourcing to a 3PL offers scalability and cost efficiency. Larger businesses with established infrastructure and specific operational needs may opt to retain control by owning logistics.
If the goal of a company is to expand its customer base and venture into new markets, outsourcing to a 3PL logistics provider might be a good idea.
Industry and market dynamics
Businesses that see a seasonal increase in order volume, like during festive seasons, should invest in 3PL logistics providers as they can handle the sales increase quickly. It may not be cost-effective to have self-owned logistics for seasonal demands.
The decision between owning your logistics operations or engaging a 3PL logistics provider should depend on your business goals and needs. In many cases, a hybrid approach, where businesses own some aspects and outsource others, is also viable. If you are a business looking to optimize your logistics operations, Mojro is at your service. With our AI-powered optimization solutions, logistics management will be a breeze.