3PL –  Third Party Logistics & Its Benefits

Owners of businesses frequently lack the detailed knowledge necessary to guarantee success. However, asking for assistance from a 3PL is frequently a workable solution that ensures delivery success, and customer satisfaction, and raises your bottom line’s profitability. Everyone benefits and everything works out well.

What is Third Party Logistics (3PL)?

Third-party logistics, or 3PL, is a service that allows businesses to outsource or use third-party businesses to complete tasks in their supply chain.   In the business world, 3PL refers to any service contract that involves storing or shipping items. A 3PL service can be provided by a single provider, such as transportation or warehouse storage, or it can be a system-wide bundle of services capable of managing the supply chain.

  • Companies that provide comprehensive, even one-stop solutions for enterprise supply chains in packaging, warehousing, transportation, and order are known as 3PL providers.
  • 3PLs can help you identify and fill gaps in your supply chain.
  • Their expertise, best practices, and technologies can be integrated into your business processes to solve the most complex logistics challenges and make your supply chain a more agile, responsive function, which is essential in today’s uncertain market environment.

Who uses 3PL?

The fastest growing and most successful companies partner with 3PLs, whether they offer a single product or a full catalog, hand-made items, or subscription orders. Many businesses use 3PLs, such as those that sell the following:

  • Spirits and wine
  • Goods in bulk
  • The raw materials
  • Electronics
  • Pet equipment
  • Neutraceuticals
  • Apparel\sCosmetics
  • Merchandise in general etc.

What Services do Third-Party Logistics Providers Offer?

Logistics services can be of many different types, and many 3PL companies specialize in different parts of the supply chain. Most logistics services fall into one of the following categories:

  • Procurement
  • Order fulfillment
  • Transportation
  • Storage and Warehousing

What are the benefits of using a 3PL?

Cost Savings:

Third-Party Logistics companies excel in logistics and thus have a  vast network than your company’s supply chain function. They have certain relationships within the logistics sector and can have a massive impact during negotiations, They can also help to offer greater volume discounts to clients. All of this minimizes the overall cost.

Access to Expertise:

If you are just starting, logistics can be a big and confusing step, so it may be necessary to gain insight from a company that specializes in this area. Engaging experts can improve and guide the way your logistics operation operates, allowing you to focus on other aspects of your business.

Flexibility and Scalability

Third-party logistics companies have a significant advantage in that they can provide businesses with the flexibility and scalability to use resources based on current business needs. In other words, working with a 3PL makes it easier to explore the high and low periods because they can help you respond to changes in demand quickly. They can also scale resources like transportation, labor, or space based on inventory needs without adding risk or hard yards.

Business Growth

Working with a 3PL also allows businesses to expand into new markets without difficulty. Those looking to expand into new markets, either domestically or internationally, benefit from the logistics support and industry expertise of a 3PL. This reduces costly delays and cycle times, making the transition into a new region much easier.

Improve Customer Satisfaction

If you choose a 3PL that truly understands the value of customer service, you’ll be rewarded with positive feedback, repeat orders, and strong recommendations.

A 3PL with a strong order management system (OMS) can assist you in delivering. They can help you optimize inventory so you can fulfill orders from multiple sources (DCs, stores, vendors). This makes it simpler to provide customer-friendly services such as buying online/picking up in-store and ordering online from the store.

3PL vs 4PL

The primary distinction between a 3PL and a 4PL provider is that a 4PL manages the entire supply chain, whereas a 3PL focuses on logistics.

  • 4PL providers work on optimization and integration, whereas 3PL providers work on day-to-day operations.
  • 4PL providers offer the highest level of logistics services at the best possible price, whereas 3PL providers are more focused on one-time transactions.
  • 3PL providers frequently own many or all of the assets required to run their supply chains, such as trucks, distribution centers, and warehouses. 4PLs, on the other hand, are typically not asset-based.