In the manufacturing business, there’s more to selling products than producing things people want and need. You products also have to ship your products according to your customers’ wants and needs. Otherwise, your customers could replace you with one of your competitors. Officially known as vendor compliance, delivering products to retailers in the required fashion can be accomplished in one of three ways: having your own shipping fleet and logistic function, outsourcing your logistics to a third party logistics (3PL) provider; or implementing logistics software, which performs the work of a logistics expert and presents the results via a user friendly interface. For smaller companies, the decision usually comes down to the latter two.
To determine whether 3Pl or logistics software is best for compliance, it helps to look at compliance form a vendor perspective. In many cases, to meet a customer’s requirements, a vendor must hiring more personnel and/or implement new procedures for dealing with compliance requirements, many of which are connected to the shipping process, such as purchasing, receiving, and inventory control. From the customer end, on the other hand, a vendor’s lack of compliance could result in elevated product price due to the extra cost of bringing it to market. Therefore, the goal is to achieve compliance as inexpensively as possible.
Which Logistics Method is Least Expensive for Achieving Vendor Compliance?
For companies that need to save money on the shipping process, the decision soon becomes whether to hire a 3PL provider or implement logistics software. To understand which option is least expensive, it helps to look each of them from the standpoint of the shipping process.
How 3PL Works
There are four types of 3PL providers: standard 3PL providers, which offer basic shipping services but rarely feature 3PL as a core practice; service developers, which offer more refined shipping services but not integrated shipping plans; customer adapters, which manage an existing shipping process; and customer developers, which manage the shipping process and propose new shipping solutions. Because vendor compliance can involve various aspects of the shipping process, a customer developer would be the best choice. However, logistics software provides the same level of options at a fraction of the cost.