How to choose the best 3PL for Malaysia

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What is a 3PL provider in Malaysia?

3PL providers offer services that help e-commerce businesses handle their supply chain. Hiring a 3PL provider allows e-commerce merchants to focus on other aspects of their business, saving time and resources.

Generally, 3PL services provide business services such as inventory management, warehousing, shipping, order fulfillment, retail distribution, and post-sales services such as returns and exchanges. With the help of the best 3PL companies for e-commerce, businesses can outsource warehousing and distribution tasks. 

For example, the inventory of a Malaysian business is stored in the 3PL warehouse in Malaysia due to the products being shipped directly from the manufacturers. When customers place online orders, the top 3PL companies in Malaysia handle the seamless fulfillment process. 

As a result, e-commerce merchants have extra time and resources to focus on their core strengths: product development, marketing, and sales. With the support of a reliable 3PL in Malaysia, the handoff between order receipt and fulfillment is effortless, ensuring a smooth customer experience. 

It shouldn’t be a surprise when we tell you that 3PL providers are one of the main reasons e-commerce businesses worldwide have been able to turn around from the supply chain crisis due to the COVID-19 pandemic. When markets opened up in 2021, the e-commerce market saw a boom, with the revenue of 3PL in Malaysia reaching $4.87 billion in revenue after a growth of 47.8%

Factors to consider when picking a 3PL provider in Malaysia

When you start choosing the 3PL companies in Malaysia, there are certain things you should keep in mind. More often than not, the top 3PL companies in Malaysia have all these factors in common:

Experience and company reputation

When it comes to logistics, companies that are experienced and have operated for a while have the edge over others. Additionally, businesses should research their reputation before tying up a partnership deal with 3PL companies in Malaysia. Understanding 3PL companies’ relationship with their customers, shippers, and employees helps businesses select the best 3PL provider.

Reliability

Before partnering with a 3PL in Malaysia, businesses must ensure that providers are resilient and have the resources to manage constant disruptions. You can evaluate their financial stability track record, business practices and methods, and relationships during economic downturns. 

E-commerce businesses should select one of the top 3PL companies in Malaysia that prioritize its ability to navigate challenging situations and maintain reliable services in the face of disruptions.

Customer service

Ensuring your chosen 3PL partner consistently meets the required communication, responsiveness, and professionalism standards is essential. In recent years, shippers and 3PLs have recognized the growing importance of quick and accurate customer responses, making it crucial for 3PL companies in Malaysia to enhance their capabilities in delivering timely information. 

Generally, the best 3PL companies in Malaysia demonstrate a commitment to effective communication and prompt responsiveness, enabling seamless collaboration and customer satisfaction.

Scalability and flexibility

Partnering with a 3PL company that can scale up operations when needed and adapt to your evolving business requirements for seamless logistics management is crucial.

When selecting a 3PL company in Malaysia, businesses should always inquire about their ability to handle high volumes during peak seasons and accommodate their growth. This, in turn, will lead you to assess whether they possess the necessary infrastructure to support long-term expansion and maintain operational flexibility. 

Organization and safety of the consignment

For the top 3PL companies in Malaysia, the safety of client inventory and warehouse workers should be paramount. While selecting a 3PL partner, businesses must thoroughly review their safety guidelines and consider conducting a physical or 360-degree video tour of their warehouse facility.

Technology and Integrations

In Malaysia, the role of technology in the success of shippers and third-party logistics providers (3PLs) is of utmost importance. The significance of technological capabilities in 3PL partnerships is growing as shippers prioritize the best 3PL systems to enhance their logistics operations.

Recent surveys in Malaysia have highlighted the unanimous agreement among shippers and 3PL companies regarding the significance of updated technology. For businesses, advanced technological solutions increasingly influence collaborative decisions with 3PL providers.

Benefits of 3PLs

Free up capital that’s tied up in warehouse spaces

Investing in private warehouses and distribution centers in Malaysia increases costs due to the significant investment. On top of that, projections have indicated an expected shortage in warehouse spaces by 140 million square feet in 2024, further driving up prices.

This is where 3PL companies provide the best solution. Businesses benefit from warehouse cost savings by partnering with the best 3PL companies in Malaysia. 3PLs already have established storage facilities, benefiting from higher order values from retail partners. 

These well-managed providers have the best 3PL systems that offer streamlined operations, saving you time and effort while implementing effective strategies for sustainable business growth. Thus, entrusting 3PLs with warehousing frees up capital for more profitable pursuits.

Test and launch in new domestic and international markets

For Malaysian businesses looking to expand internationally, navigating the complexities of global fulfillment, documentation, and accounting can be daunting. With the help of the top 3PL companies in Malaysia, businesses have a practical solution for testing international markets without requiring extensive infrastructure or legal expertise.

For instance, Malaysian merchants can store a small inventory batch in the target country, such as the United Kingdom, effectively testing the waters with the help of a 3PL. Outsourcing these responsibilities simplifies logistics, accelerates delivery, enhances customer satisfaction, and reduces shipping costs while positively impacting customer service.

Reducing overhead costs

In Malaysia, partnering with 3PL companies presents an opportunity for businesses to significantly reduce their overhead costs. With the help of the best 3PL systems, e-commerce merchants gain access to skilled warehouse staff, advanced warehouse automation technology, and the best 3PL software without any substantial upfront investments.

To further optimize their operations, businesses in Malaysia have the option of incorporating robotic machinery for order fulfillment. As a result, they enable round-the-clock operations and immediate shipping, eliminating the need for human staff throughout the day.

Furthermore, 3PLs in Malaysia have the advantage of negotiating preferred shipping rates with carriers. This means that the shipping cost is typically lower, allowing businesses to pass on the savings to consumers through offerings such as free shipping.

Protection against global supply chain disruptions

The global supply chain has been quite vulnerable and prone to disruptions in the last few years owing to natural disasters, political instability, and pandemics. When protecting your Malaysian business against global supply chain disruptions, partnering with 3PL companies in Malaysia offers significant advantages. 

In Malaysia, partnering with a 3PL offers businesses access to a global network of fulfillment centers and pre-negotiated carrier contracts. This helps navigate shipping disruptions effectively with diversified carrier options and established relationships, ensuring reliable operations.

In Malaysia, 3PL providers are making significant investments in their delivery vehicles to enhance logistics capabilities. Consequently, businesses can circumvent potential bottlenecks in the supply chain, ensuring smooth operations and minimizing the impact of disruptions.

Disadvantages of 3PL

Even though there are many benefits of 3PL providers, some instances may showcase certain disadvantages businesses face when partnering with them. Let us take a look:

Tracking multiple-carrier orders

The top 3PL companies in Malaysia often provide businesses with different options for shipping. Thus, it is relatively common to have multiple carriers ship your orders. 

However, the problem arises in the real-time tracking of multi-carrier orders. Tracking can be even more stressful when multiple carriers are used to ship one order.

Loss of control

While 3PL companies in Malaysia offer various benefits, there are some disadvantages, primarily the potential loss of control. This is due to businesses relinquishing control over the delivery process. They must rely on the 3PL to meet agreed-upon SLAs (service-level agreements), with the probability of it negatively impacting customer satisfaction.

Sharing proprietary information with a third party poses data security and confidentiality risks, raising concerns about potential vulnerabilities in case of a breach.

Upfront costs

The top 3PL companies in Malaysia can go a long way in reducing businesses’ operational costs. However, businesses must pay a significant amount of upfront fees to 3PL companies for their services. 

These fees usually include the following:

  • Integration & Account Fees: 3PL companies in Malaysia charge money to set up business accounts and integrate them with their system.
  • Warehouse Fees: A monthly fee based on the charge per storage pallet and the total space used.
  • Transportation and Shipping Fees: The cost of shipping products from your manufacturing unit to the warehouse and then to the customer.
  • Receiving Fees: This is the fee paid to the transportation provider for offloading and helping store goods at the warehouse.
  • Pick-and-pack Fees: The fees businesses must pay to the 3PL for helping companies pick and pack units from storage for shipping.
  • Minimum Fees: Most of the top 3PL companies in Malaysia have minimum monthly spending fixed that their partner businesses have to comply with.

Workflow

One of the disadvantages of partnering with 3PL companies in Malaysia is the potential impact on workflow. When there is a backlog of orders and a need for immediate action, businesses may find it tempting to pack and ship orders personally. However, with a 3PL arrangement, this option is not available.

3PLs’ fixed operating hours and established workflows may not always align with immediate business needs. This misalignment can disrupt workflows and impact order fulfillment and customer satisfaction.

Types of Services Offered by 3PLs

There are several types of services offered by 3PL companies in Malaysia. These services enable businesses to optimize their storage needs and streamline their supply chain operations when working in tandem. Let us find more details about these services:

Warehousing services

The top 3PL companies in Malaysia provide merchants and businesses with efficient and secure storage of goods, mainly via public warehouses where storage options are allocated based on priority, capacity, and demand. Customers can also avail of the service of contract warehouses where only their goods are stored for a fixed period.

Moreover, specialized and high-security storage facilities are available for different products, such as chemicals, food, valuable items, and products requiring specific environmental conditions. 3PL companies in Malaysia also offer In-warehouse tracking and positioning systems to ensure easy identification and retrieval of goods. 

Procurement & receiving services

In Malaysia, one primary service offered by the best 3PL companies is receiving and ordering goods from manufacturers to warehouses on demand.

Through this service, 3PL companies are primarily in charge of inventory management. They also have the provision to order more stocks if a particular product runs low in the inventory. 

Order fulfillment services

Regarding essential services provided by 3PL companies, order fulfillment takes center stage. This means that 3PL companies receive customer requests for goods and manage inventory by deducting stock levels when orders are received. The seamless execution of order fulfillment by 3PL companies in Malaysia ensures efficient and reliable delivery of products, optimizing the supply chain and enhancing customer satisfaction.

3PL companies are responsible for picking, packing, and distributing items from their warehouses. They handle various order types, including e-commerce, drop shipping, and distribution to other logistics providers or 3PL customers. Ensuring efficient and accurate delivery, 3PL providers play a crucial role in the timely distribution of goods.

Distribution services

Distribution services are the final piece of the jigsaw for 3PL providers. Distribution services offered by top 3PL companies in Malaysia have a range of options to transport goods efficiently. Some of these include: 

  • Drayage: The act of goods moving the last leg of the journey via trucks.
  • Cross-docking: The act of unloading and loading goods directly between inbound and outbound transport with no storage in the middle. 
  • Intermodal transport: The act of moving shipments via different modes of transportation.
  • Brokerage: The act of being the middleman for freight service providers and businesses or shippers.
  • Full container load (FCL): As the name shows, a type of ocean shipment with a freight container full of goods.
  • Less than container load (LCL): A type of ocean shipment with a freight container having other goods apart from your product. 
  • Less than truckload (LTL): This is a type of shipping of small goods that don’t take up the entire space of freight trucks.
  • Truckload (TL): A type of shipping where goods cover the entire capacity of a freight truck.

These companies also focus on fleet optimization, utilizing AI mapping and modeling to ensure the most effective delivery routes. Advanced technologies such as GPS and Internet of Things (IoT) devices are used to track the movement of goods, providing real-time visibility.

Conclusion

Choosing the best 3PL for your logistics needs in Malaysia requires careful consideration and evaluation. Look for a 3PL company in Malaysia with a proven track record, expertise in your industry, and a strong network of partners. Prioritize flexibility, scalability, and advanced technology solutions to ensure seamless operations and adaptability to changing market demands. 

Remember to assess their safety protocols, cost-effectiveness, and ability to handle international expansion if needed. The best 3PL company in Malaysia will align with your business goals and values, providing tailored solutions to optimize your supply chain and drive growth.

FAQ’s

What questions should I ask my 3PL provider?

The main questions you should ask your 3PL provider are about their services and the technology used.

What are the 3PL evaluation criteria?

The best 3PL providers can be primarily evaluated based on their experience, reliability, customer services, scalability, and technology. 

What are the different types of 3PL?

The different types of 3PL providers are the standard 3PL providers, 3PL customer developers, 3PL service developers, and 3PL customer adapters. 

What is a 3PL business structure?

By hiring a 3PL service provider, businesses maintain oversight over their logistics and product but put the 3PL company in charge of daily logistics operations.

How to save costs with 3PL?

You can save costs in 3PL by freeing up the capital invested in warehouse and storage.

How do you cut costs in logistics?

Hiring a 3PL service provider is one of the best ways to cut costs in logistics.

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