A 3PL (third-party logistics) partner provides outsourced logistics services that encompass anything and everything that involves management of a single or more facets of fulfillment and procurement activities. In business, third-party logistics has a broad definition that can be applied to any service contract involving shipping or storing items.
3PL services might be one provider, such as warehouse space or transportation management, or it could be a bundle of systemwide services capable of managing supply chains.
How Do They Work?
Third-party logistics companies offer different services and fulfillment processes, so the process will vary, depending on which 3PL you choose.
Here’s an example of how the average 3PL service operates:
- You deliver inventory to the third-party logistics from your storage room or directly from the distributor.
- The 3PL accepts and organizes every SKU in the warehouse.
- Once a customer orders, it is either manually submitted to the 3PL or they automatically receive it via a software.
- An employee at the 3PL provider picks the purchased items and places them in boxes to be shipped.
- The third-party logistics sends the orders through a shipping service provider locally (e.g., DHL, UPS, FedEx, USPS).
Types of 3PL Providers
3PL providers are defined depending on their specific purposes and their specialized areas of logistics. There are 3 types of third-party logistics providers:
Transportation-based. This type of service specializes in moving products between locations. These providers include carriers of parcels, such as UPS and FedEx, as well as other modes of transportation like air freight, ocean, and rails.
Warehouse-based. These providers usually process, fulfill and then ship items. Prior to an order being placed, a 3PL warehouse gets inventory, like pallets, from the business’ manufacturer or supplier and keeps it. An example of a warehouse-based provider is the DHL Supply Chain.
Financial and information-based. Instead of dealing with the physical factors of logistics, this type of provider specializes in areas like freight payment as well as inventory management utilizing software for advanced management. An example of a financial-based provider is C.H. Robinson.
How 3PL Streamlines Business Logistics
Enhancing Supply Chain Efficiency
Many 3PL providers market the benefit of what is known as zone skipping to potential clients, because it shortens the distance between products to be shipped and customers, resulting in lower shipping costs.
Improving Customer Satisfaction
Utilising a 3PL provider allows you to offer faster delivery to all your customers, as you are able to utilise the 3PL’s efficient and established distribution network.
Risk Mitigation
3PL providers can help reduce risks in the supply chain. They have expertise in managing risk, planning for disaster recovery, and business continuity. With the use of their resources and networks, 3PLs could offer backup plans, different transportation routes, and contingency plans to minimize disturbances caused by calamities, labor strikes, or other unpredictable events.
Efficiency Increase With Order Processing And Returns
Outsourcing fulfillment of orders and returns to a 3PL provider could significantly increase the supply chain’s efficiency. A 3PL provider could offer modern technologies, customized solutions, as well as discounts for bulk shipping to streamline order fulfillment, decrease delivery times, and improve precision.
Maximizing Logistics With 3PL Solutions
Outsourcing logistics to a 3PL provider offers businesses a streamlined, cost-effective approach to supply chain management. By leveraging specialized expertise, advanced technology, and established networks, companies can optimize transportation, warehousing, and order fulfillment while reducing operational complexities. The ability to enhance efficiency, minimize risks, and improve customer satisfaction makes 3PL an invaluable asset for businesses looking to scale.
With a trusted 3PL partner, businesses can focus on core operations while ensuring seamless logistics. From faster deliveries to better inventory control, 3PL services create a foundation for growth, helping companies stay competitive in an ever-evolving marketplace.
