Third party logistics or 3PL is a logistics provider that provides a variety of services to businesses such as warehousing facilities, order distribution, packaging, inventory management etc. The benefit with 3PL is that there is only one point of contact for the whole range of services when it comes to logistics.
They will take care of a large part of the supply chain for you from managing inventory, ordering more inventory when there is low stock, storing your products at a warehouse, packaging the items that have been ordered and shipping them to your customers. There are also specialise services provided by 3PL Logistics such as freight forwarding and reverse logistics. Reverse logistics come into play when a customer wants to return their item. The 3PL provider will then handle the entire process from picking it up to bringing it back to the warehouse and storing if it is in good condition or disposing of it. If you have a large scale business, a 3PL provider that also provides freight forwarding will be very beneficial as you can handle imports and exports through them. The general services will be procuring products, storage of products, warehousing, order fulfilment, packing the products, shipping, transportation etc.
You can’t expect every 3PL provider
To offer the same services so you need to research potential companies that can fulfil the services you are looking for as a company. It is important to select a 3PL provider that can scale up or down according to your requirements. This way, you can actually grow with the 3PL provider without having to choose another company and then shift storage which can be a large undertaking. You may have come across the term 4PL as well which is short for fourth part logistics that do everything that a 3PL provider does but with a small difference. The entire supply chain of the customer is handled by a 4PL provider so that they are the single point of contact for everything. But when it comes to a 3PL provider, they will be focused on the logistic part mainly and you will still be managing the control of the supply chain.
The reason that many businesses outsource
The logistics part of their operation for 3PL providers is that logistics tend to be quite complicated. It can be difficult to maintain warehousing for your product because you need to keep building more warehouse space when required and this can cost an additional amount. You don’t need to worry about this when working with a 3PL provider. 3PL providers have a lot of experience in logistics operations and they will be able to carry out their services efficiently which will boost customer satisfaction as there are no delays with deliveries. And you will be able to enjoy reduced costs compared to managing everything on your own. You will have increased access to resources such as warehouse space and staff members for order fulfilment along with expert professionals who can provide individualised solutions for shipping, freight etc.