How 3PL Companies Can Seize the Opportunity of Supply Chain Diversification
Recent disruptions like the COVID-19 pandemic, geopolitical tensions, and environmental disasters have highlighted vulnerabilities in traditional supply chain models. As a result, the supply chain is increasingly diversifying to mitigate these risks and remain resilient during times of crisis.
This diversification promises to increase the demand for 3PL companies to offer additional services, which, in turn, will help them expand their markets and create new revenues.
In our blog, How 3PL Companies Are Using Automation to Thrive, we discussed how automation helps increase the productivity and enterprise value of 3PL companies.
Below, we explain five ways 3PL companies can seize the opportunities offered by supply chain diversification:
Diversifying suppliers
Relying on a single supplier or region, especially in highly concentrated manufacturing hubs like China, has proven risky during disruptions like factory shutdowns or trade restrictions. One of the key strategies manufacturers and distributors are adopting is sourcing products and materials from a broader range of suppliers, often from multiple regions or countries.
By diversifying their supplier base, these companies reduce the risk of supply shortages, delays, and price volatility. Instead of relying solely on one region or a single supplier, these companies establish partnerships with several suppliers in different geographical areas, offering them alternative sources if one region or supplier faces disruption.
This diversification will likely increase the demand for 3PL services as companies struggle to manage their logistics.
Nearshoring and regionalization
Another trend is nearshoring, where companies move production or sourcing closer to the end market. Instead of relying on long global supply chains, 3PLs are helping businesses establish regional networks that reduce shipping times, transportation costs, and risks associated with cross-border logistics.
For instance, companies serving the U.S. market are increasingly partnering with suppliers in Mexico or Canada. Nearshoring shortens delivery times and minimizes exposure to global disruptions like port congestion or international shipping delays. With nearshoring, companies can offer faster response times, enhanced service reliability, and greater flexibility to adapt to fluctuating market demands. To accomplish their nearshoring objective, these companies need the help of trusted 3PL partners to help reduce shipping times, transportation costs, and risks associated with cross-border logistics.
Diversifying 3PL services
Manufacturers and distributors are looking for reliable 3PL companies that offer multiple services, such as forwarding, warehousing, customs documentation, and last-mile services.
3PL companies that only provide a single service, like warehousing, trucking, or forwarding, might consider diversifying their 3PL service offerings to expand their customer base, increase revenues, and retain loyal customers.
Investing in technology for greater visibility
3PL companies are leveraging technology to gain greater visibility into their operations and manage risks proactively. With the help of AI and predictive analytics, 3PL companies can identify trends and forecast potential disruptions. This technology-driven approach empowers logistics providers to take preventative actions, reroute shipments, predict changes in customer demand, or identify potential disruptions before they impact their operations.
Sustainability and environmental considerations
Environmental regulations and consumer preferences push companies to diversify supply chains with sustainability in mind. By sourcing from environmentally responsible logistics providers or choosing more eco-friendly transportation modes, companies can reduce their carbon footprint, comply with stricter regulations, and attract eco-conscious customers. 3PL providers have an opportunity to follow sustainable practices, ensuring the entire supply chain is environmentally friendly.
Find out what ArcherPoint and Dynamics 3PL can do for you
The diversification of the supply chain ultimately strengthens a company’s competitive position and ensures long-term sustainability in the logistics market.
Contact ArcherPoint for a free assessment to see how we can help your 3PL company seize the opportunities in today’s competitive market.
And be sure to download our infographic, 5 Ways 3PL Companies Can Seize the Opportunity of Supply Chain Diversification.