Sheryl S. Jackson recently interviewed several industry experts, including St. Onge Company’s Bryan Jensen, about 3PL use in today’s e-commerce market. There are many factors to consider when choosing whether or not to outsource, and even more when deciding which 3PL partner to use. In the article, Bryan breaks down some of the ways to make these considerations.
Another way to evaluate which way to handle fulfillment or distribution is to determine the predictability of a company’s growth, suggested Bryan Jensen, chairman and executive vice president of MHI member St. Onge Company. “Both approaches—3PL or in-house operation—can be very effective,” he said. However, with the rapid growth of and changes in the e-commerce world, a company must be very certain of the fulfillment and distribution needs five years from today to ensure the investment in a distribution center is fiscally sound. “If growth is rapid and unpredictable, a company runs the risk of investing significant funds in equipment and buildings that will be obsolete in two years,” he explained.
Companies in a rapid or uncertain growth mode tend to find more success with 3PLs until growth plateaus and needs are more predictable, said Jensen. “Small companies also benefit from the economies of scale offered by multi-tenant 3PLs,” he said. “Mature companies with multiple sites and existing distribution centers may opt to have a 3PL manage some or all of the distribution centers.”