If you’re starting a new company that will ship its goods to various locations, you’ll probably come to find that, compared to shipping them, producing your goods is the easy part. From the outside, the shipping process can seem as simple as striking a deal with the first carrier that comes along. But from the inside, where the shipping process is a company’s second biggest expense to payroll, finding the right shipping arrangement can mean the difference between an impressive bottom line and one that struggles to show a profit. To find the right shipping solution, shippers typically explore the following three logistics options: in house logistics, third party logistics (3PL), and TMS logistics software. To help you decide which option is right for your company, we list some advantages and disadvantages of each one.
In House Logistics
Advantages: The greatest advantage of in house logistics is that you have a professional logistics team on hand at all times, as opposed to having a distant relationship with a third party that handles your logistics. In addition, in house logistics experts bring the dedication that comes with being part of a company.
Disadvantages: The greatest disadvantage of in house logistics is that logistics experts don’t come cheap, with experienced experts easily earning $80,000-$90,000. When companies become large enough, they typically create a logistics department to oversee their shipping fleet. But until then, in house logistics can be too costly.
Third Party Logistics
Advantages: The greatest advantage of third party logistics is that a 3PL provider assumes total responsibility for the logistical operations that you hire it to manage. There are four types of 3PL providers: standard 3PL providers, which offer basic logistical services; service developers, which offer specialized services; customers adapters, which manage a company’s existing shipping process; and customer developers, which manage the shipping process and devise innovative solutions.
Disadvantages: The greatest disadvantage of third party logistics is that, unless a company hires a costly customer developer, it won’t receive both management of the shipping process and innovative shipping solutions. In addition, the number one complaint of 3PL customers worldwide is that they experience poor communication with their 3PL provider, making them feel distanced from their shipping process.
TMS Logistics Software
Advantages: The greatest advantage of logistics-software is that it does the work of a logistics expert at a fraction of the price, and is more economic that 3PL as well. Presenting recommended shipping options through a user-friendly interface; logistics-software does not require logistics expertise to operate. If you’d like to be your own logistics provider without the expense of hiring experts, logistics-software is the answer.