How 3PLs Save Companies MoneyWritten by Neal Willis
Generally speaking, shippers often receive more attention from carriers when they work alongside a 3PL versus going it alone. Working with a 3PL allows carriers to take advantage of the 3PL’s sales and operations staff enabling them to keep their eyes and ears focused on a shipper’s business. By working with a 3PL, both shippers and carriers alike can realize Hard & Soft Dollar Cost Savings and benefit from multiple Process Efficiencies, much of which is achieved through Technology, saving them both time and money in different ways.
Hard & Soft Dollar Cost Savings
3PL essentially allows a shipper to employ an entire staff of logistics professionals without adding the additional payroll expense. For example, freight payment and audit is an area where companies tend to spend a great deal of time and money. A 3PL offering a freight payment and audit service can deliver hard dollar savings when their professionally trained freight bill auditors catch carrier billing mistakes. Invoicing errors alone that are caught and corrected by a skilled freight bill auditor will save lots of money.
3PLs employ experienced specialists to handle tracking and billing requests from you and your customers, which means less money and time spent internally on customer service issues. Plus, a 3PL can help solve problems faster and get answers quicker. They have spent years building relationships with carriers that can’t be developed overnight and know who to turn to when help is needed.
With their buying power and proprietary rates, 3PLs help companies lower their freight rates and often have negotiated proprietary pricing concessions from their partner carriers, such as heightened claims liability limits, lower fuel surcharges, and reduced or waived accessorial fees, all of which shippers can have a tough time negotiating on their own. Also, when working with a 3PL shippers are easily afforded the ability to compare multiple carrier rates and service options at once to ensure they’re routing freight least cost.
With the help of a 3PL and their TMS solutions, shippers can easily automate their freight quoting and routing processes and cut down the amount of time spent manually obtaining rate quotes. A freight payment and audit service also allows data to be centralized and used for reporting and analytical purposes. Rather than having to trace information across multiple departments from multiple people, freight data, which can be sorted and analyzed in a countless number of ways, is made accessible from virtually anywhere at any given time.
EDI (electronic data interchange), which can be used for both the sending and receiving of invoices along with shipment tracking and status information, can help to virtually eliminate paper; however, shippers often find that integrating with carrier accounting and back-office systems can be difficult. By taking advantage of a 3PL’s technology and IT resources to facilitate EDI, overhead costs are reduced for both the carrier and the shipper.
Rather than having to spend an exorbitant amount of time and resources in-house to have freight rates displayed in your online shopping cart, a 3PL will handle the entire process of integrating freight rates into an ecommerce platform. Plus, they will provide the dedicated support necessary to keep systems up and running and will bear the costs of ongoing maintenance.
3PLs offer shippers a variety of ways to save money and they are all somewhat intertwined. In fact, many carriers often work with 3PLS for the same reasons as shippers, because they benefit from Hard & Soft Dollar Cost Savings, Process Efficiencies, and Technology as well.