The logistics industry has both asset and non-asset based 3PLs to help make supply chains more efficient. To some this just means more options and to others this could be added confusion. Third-party logistics are designed to be beneficial to its users, so both of these categories could be great options for you and your company. Here let’s go over the two kinds of 3PLs and note the distinguishing features of both. With the following 3PL classifications, you can make a clear and informed decision on which method can be more equitable to you.
Asset Based 3PLs
An asset-based 3PL is a logistics firm that owns all or most of the necessary assets to run a client’s supply chain. These assets include trucks, warehouses and distribution centers, among others. A good asset-based 3PL should have past experience in cutting costs for its clients. Alongside, they should have the correct documentation as proof when needed. Having access to transportation, drivers and privately owned warehouses gives this category a leg up. Consistent information is available to an asset based 3PL, which can optimize supply chain needs. Asset based 3PLs use their investment to offer some advantages such as security and stability. You will be assured that this type of 3PL will not leave you high and dry in any circumstances. In addition, this type of 3PL own the physical assets that can confidently handle all aspects of the supply chain without needing help from others.
There are a few disadvantages to asset based 3PL as well. First, there is a fixed rate, so these providers must use the resources they own themselves and have less wiggle room in terms of cost standardization. And secondly, there is limited flexibility. Cost-saving solutions cannot be automated due to the limitations set by the resources they already invested in.
Non-Asset Based 3PLs
A non-asset based 3PL is a logistics provider that does not own the assets necessary to direct and execute a supply chain. These 3PL do not own their own trucks, warehouses or distribution centers. Instead, a non-asset based 3PL uses their skills to negotiate contract rates with warehouses, trucking companies and distribution centers. Their goal is to handle the supply chain needs with spending the least amount of money. This provides the flexibility that some companies require. Different clients have different priorities, so they opt out of going with the “one size fits all” method. You will be given the opportunity to work out a customized plan with a non-asset based 3PL. Then they will go ahead and carry out the plan as per their expertise, so you can focus on other business requirements. You can expect a high level of personalization and cost-saving solutions when choosing a non-asset based 3PL.
Like asset based, there are certain disadvantages to going with this type of 3PL. There could be a hindrance in stability because there is a lack of solid infrastructure, which could leave clients to fend for themselves. And there is a certain risk involved when outsourcing major responsibilities. If you partner with the wrong companies, then you can end up with poor supply chain management.