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Fully Connected Shipping

Using Third Party Logistics (3PL) But Retaining ERP-Integrated Control

For shippers looking to reduce transportation costs or grow quickly, the option of engaging with a Third Party Logistics (3PL) operation to outsource part or all of your supply chain management functions might become appealing.

Pacejet can help business shippers leverage 3PL operations as an integrated part of ERP systems and internal business processes, connecting 3PL systems as a network service that allows users to quote, rate-shop, or accept 3PL carrier recommendations for shipping but also to be involved in managed transactions such as using a 3PL for carrier selection and billing but still running pick-pack-ship execution as part of your internal operations.

Read on for more information on leveraging 3PL operations in your business and as an integrated part of your ERP system via Pacejet.

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Advantages and Disadvantages of Using a 3PL

Advantages of using a 3PL can include faster re-configuration of fulfillment processes to respond to customers, lower upfront capital, carrier flexibility and lower rates, and allowing shippers to focus on other core operations. However there are disadvantages of using a 3PL which can include losing control of internal business processes, lack of ERP integrated processing, and less visibility in order fulfillment since the operations and the data are managed outside of your business.

While your specific business strategy will help answer most of questions on trade-offs, where Pacejet can help is by connecting 3PL operations seamlessly into your internal business processes to help mitigate concerns of lack of integrated transaction management with your ERP systems or loss of process visibility.


ERP-Integrated Quoting and Shipping

If you decide to use a 3PL provider, you can activate direct integration of that third party provider in Pacejet to enable ERP-integrated quoting and shipping transaction management. Many 3PL operations will have their own standalone "website systems" and possibly even offer to pass data files or use EDI to support your ERP systems, but very few have enough focus on ERP systems or integration, or even modern, cloud-based technologies to provide a complete and seamless solution.

The Pacejet solution for 3PL processing is to support 3PLs as "another carrier in your network", allowing you to quote, rate-shop, and even pick-pack-ship with a 3PL in the same manner as other carriers. This approach gives you a good balance between outsourcing large parts of activity to 3PLs but also allowing you to keep some of the work and the visibility in-house.


Leveraging Shipment Spending for Better Rates

Another area of value-add for some 3PL operations is leveraging pre-established negotiated rates to directly lower shipper transportation costs. Basically the 3PL uses their overall volume of customer shipments to negotiate better shipping rates and then passes a portion of those savings on to smaller shippers with less buying power. The same carriers might pick up your shipments, you might receive a single bill from your 3PL instead of your carrier, but the new contracts would lower your overall shipping rates.

In this scenario, Pacejet becomes a good option to continue to allow you to run your own pick-pack-ship operations with Pacejet providing the ERP-integrated shipment processing and connectivity with a 3PL as-if they were your primary or an additional carrier.


Where to Start

The answer is it doesn't have to be complicated to start, although the decision to outsource to a 3PL is a major move. In fact, if you already have Pacejet in place you already have a platform to "try out" a new 3PL for service-levels, rates, and other proof-points that help you feel more comfortable in building-out a more dependent and larger-scale 3PL relationship over time. As one strategy we recommend, you can activate 3PL rating in Pacejet and start piloting the new rates with various types of shipments as part of your due-diligence on a 3PL.

Interested in learning more about how Pacejet can help you run better, ERP-integrated shipment processing with 3PLs, please contact Pacejet at info@pacejet.com or 877-722-3538 for more information.


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Topics: Pacejet - Tips and Tricks, Pacejet - Articles, Pacejet - Strategy