8 Reasons Why Outsourcing Shipment Tracking To Third Party Logistics Services (3PLs) Can Hurt Your Business?

Do you outsource your shipment tracking process to third party logistics services?

We have observed that numerous organizations outsource their third-party logistics needs to get to the adaptability and scalability that an outside vendor can offer.

If their shipping needs increase rather than employing additional staff or extending distribution center space, they hire 3PL merchants for frequently supply additional capacity on request.

Most logistics managers tend to oversimplify the problem by making it a short-sighted decision based only on investment of time, effort, and money.

What is Third Party Logistics (3PL)

Third-party logistics (or 3PL) refers to the outsourcing of logistics processes, including inventory management, warehousing, and fulfillment. 3PL providers allow e-commerce merchants to accomplish more, with the tools and infrastructure to automate order fulfillment.

We don’t know for sure who coined the term “third-party logistics,” but companies began trending toward outsourcing logistics services to third parties in the 1970s and ‘80s.

With the presentation and development of the web-based business during the ’90s and 2000s, the term 3PL has turned out to be pervasive, and 3PLs have extended their services. The supply chain integration of warehousing operations and transportation services has become what we now call third-party logistics.

Real-time Shipment Tracking

Enforcing real-time shipment tracking to gain visibility throughout the supply chain is paramount for industries of all sizes. Many supply chain managers rely upon their transporters to implement track-ability to enhance efficiencies and reduce operational overheads. 

Whilst working with many supply chain processes of different industries we realized that the challenges of outsourcing the implementation of visibility to transport providers would eventually outweigh its benefits in the longer run.

Find out why this practice of outsourcing the implementation of IoT visibility solutions to transporters or 3PLs is indeed a recipe for failure.

Here are the top 8 reasons why outsourcing shipment tracking to third party logistics services (3PLs) can hurt

It Takes a Long Time to Get Response- 

When you make an inquiry, perhaps about late delivery or a missed deadline, you have to wait for a response or make repeated follow up calls or send several emails to get the information you want.  

Hidden responsibility–

Your 3PL won’t interact directly with your clients. When products are late, who will your customers turn to? You. (Regardless of whether it’s your fault.)

Inability to get maximum value from statistics-

It is hard to have a unified dashboard across multiple transport vendors. Also since the transporter is running the gadget, product improvements and the more recent reviews that can add a fee in your business are seldom observed.

Out of your hands

The biggest risks are losing control over your inventory and trusting a third-party with your brand and credibility.

Conflict of interest: 

When service level violation happens, the data reaching to you could be repurposed to suit the transporter’s agenda because they control the portal. 

Difficulty in Consolidating Reports

If you are using multiple transport vendors, each one may be using different hardware and software. It is difficult to ensure that each vendor reliably shares reports with you. They may not all have the right APIs to integrate into a single dashboard, making it tough for you to consolidate reports and get the full picture. 

Disruption to Visibility: 

A disruption to visibility is bound to happen when you switch to a new transporter. Payment delays by the transporter to the visibility vendor can also cause disruptions. 

Integrating into your enterprise ecosystem: 

Every transport provider may not have partnered with a tracking solution provider who can provide the right APIs to plug their software into your ERP/WMS/TMS systems. Further, your IT teams need to be involved in each visibility vendor’s integration, increasing the person-hours. 

Summary- 

The operational cost of implementing an IoT solution in-house is much less when compared to the spend arising from outsourcing it to your transporter. 

Hence, the win-win approach is to find a visibility provider who can provide you with an on-demand business model, manage the IoT device reverse logistics, and make the service extremely light on your operations.

Also, check out our Freight Knowledgebase guide.