Usually, auto parts retailers have preferred to conduct their sales through physical retail outlets due to the difficulties associated with eCommerce fulfillment. In this blog post, we will explore why automotive dealers should partner with 3PLs.
We all know the automotive industry boasts one of the most intricate supply chains worldwide. After all, there is a vast array of vehicle manufacturing components you deal with which include metals, plastics, semiconductors, tires, batteries, light bulbs, and speakers. Additionally, there are intricate brake systems, engine components, safety features, cooling units, gas tanks, exhaust systems, and every other element that completes a car.
It makes up an extensive network with thousands of companies operating within different tiers of automotive production. Furthermore, you might need to source many of these materials from overseas or cross-border suppliers. Once the vehicles are finally assembled, you transport them to various consumers across the globe.
Hence, it’s not surprising that you might favor collaborating with fully integrated transportation service providers capable of managing the diverse demands essential to uphold intricate supply chains.
Automotive 3PL
An automotive third-party logistics provider [3PL] is equipped to handle various auto parts while offering a comprehensive service for automotive sellers. It includes a warehouse that stores and ships oversized items like fenders, tires, seats, and engines. The global automotive 3PL market covers different segments of the supply chain and its interconnected services. Notably, the automotive logistics industry also extends its scope to cover the electric vehicles and batteries sector and is usually segmented based on service, type, and region.
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Automotive logistics comprises many market components, including Tier 1 suppliers, OEM companies, tire and battery producers, aftermarket companies, and other part manufacturers. Together, they play a crucial role in the automotive logistics industry. Each component involved in car manufacturing demands meticulous attention to logistical requirements. However, the optimal execution of supply chains by car companies is often impeded by prevailing market conditions influenced by factors such as fuel prices, demurrage and detention costs, capacity sourcing, service challenges, and other considerations.
Despite all situations, the global Automotive 3PL market is projected to experience significant growth by $93.48 billion during 2022-2027 at a Compound Annual Growth Rate [CAGR] of 6.6%.
How 3PLs Help Automotive Sellers
Proficient fulfillment is a vital strategy for fostering the growth of any business, and it holds particular significance for you due to the bulky and delicate nature of auto parts. A reliable logistics provider is essential, one that comprehends the intricacies of shipping items like rims without any damage and selects the most suitable shipping service to deliver engines to the destination.
Below are some ways 3PLs assist you to excel in the eCommerce realm:
Reliable Storage and Inventory Control Solutions
Dealing with the sale of auto parts can lead to a challenging inventory management situation. Besides stocking dozens or even hundreds of different parts, there is the necessity of having the correct version of each item to suit various models and model years. It can result in managing and organizing thousands of distinct Stock Keeping Units [SKUs] that must be readily available for secure shipment.
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Professional warehousing services come to the rescue to tackle this complexity. Logistics companies utilize advanced Warehouse Management Systems [WMS] to monitor the entire process, from the receipt of inbound shipments to order processing and final shipping. The fulfillment center space is designed to be easily scalable, allowing you to adjust the space needed based on fluctuating demand and sales volume.
Kitting
Kitting involves the practice of pre-packing items together for shipping. In the automotive industry, sellers utilize kitting to prepare Stock Keeping Units [SKUs] that are frequently sold as a group or to create sets that can be sold under a new SKU. By employing kitting, sellers can conveniently pre-assemble all the components required for their customers to rebuild their power steering system, consolidating them into a single package.
Kitting items frequently shipped together results in time-saving benefits during the pick and pack process. The picker can retrieve a single item instead of gathering multiple SKUs to fulfill an order. Kitters establish assembly lines to streamline the creation of readily prepared kits for shipping. Moreover, the kitting process aids the packing procedure as it can include a detailed Standard Operating Procedure [SOP] for securely packaging products together, ensuring safe shipping.
Streamlined Fulfillment with Expert Pick, Pack, and Ship
In eCommerce, rapid, precise, and comprehensive order delivery is a vital factor influencing customer satisfaction. When you need to return an item due to receiving the wrong part or experiencing damage during delivery, it not only affects their perception of your business but also impacts your seller’s reputation. Such incidents can lead to a reduction in your customer base. Conversely, outstanding fulfillment services have the potential to expand and enhance your customer base.
The primary focus of an automotive logistics provider revolves around timely and complete order shipping. Their Warehouse Management System [WMS] generates efficient pick lists, enabling pickers to navigate the warehouse swiftly. With the aid of systems like RFID tags or barcoding, the accuracy of item selection is ensured on every occasion. The packers possess the expertise to professionally pack each order, guaranteeing its arrival in pristine condition.
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A part of organized fulfillment is cross-docking. This technique involves labeling inbound orders directly on the dock and forwarding them to shipping without intermediate storage in the inventory. It is particularly effective for items that can be shipped using the manufacturer’s packaging, eliminating the need for additional boxing. With cross-docking, you can significantly expedite the order fulfillment process and lower storage costs.
Seamless Return Management
Even with excellent automotive logistics in place to minimize your return rate, the necessity for effective reverse logistics solutions remains crucial. Handling returns of items like engine blocks or transmissions poses a challenge, which can be efficiently addressed with the assistance of a reliable 3PL provider.
Cost Savings on Shipping
Transporting auto parts, particularly heavy or oversized ones, can incur significant expenses. Carriers often impose surcharges on packages exceeding weight thresholds, such as 70 or 150 pounds. Moreover, oversized boxes may be subjected to dimensional weight pricing, further escalating shipping costs for packages that do not fall under weight surcharges.
Maintaining affordable shipping costs is essential for your eCommerce endeavors, and your third-party logistics provider can play a crucial role in achieving this objective.
Conclusion:
To conclude, strategic automotive logistics solutions play a vital role in optimizing the supply chains of automotive industry suppliers and OEMs, enabling them to operate efficiently and effectively while freeing up valuable resources for allocation elsewhere. Thus, it would be best if you chose cautiously an efficient third-party logistics in the automotive supply chain to thrive in your business and stay ahead of the curve.
About XPDEL:
XPDEL helps eCommerce brands accelerate their growth, empowering them with multi-channel fulfillment, whether shipping directly to consumers, delivering to businesses, or selling through retail stores. We are founded and operated by veterans with experience from Amazon, FedEx, UPS, JDA, Walmart, Target, and other leading companies in eCommerce and Retail. Guided by these experts, we provide customer experiences that help you grow your business.
