Third-party logistics (3PL) is a service that helps companies by handling their logistics for them. It’s a type of outsourcing that involves an intermediary company known as a third party, which businesses contract with to handle their supply chain rather than doing it themselves. This can be advantageous for businesses in many ways. 3PL services are often able to save businesses time and money because they have streamlined processes and expertise in handling these specific types of logistics. In this blog post, we’ll explore the pros and cons of 3PL services, examples of when you should use 3PL services, what you should look for in a 3PL partner, and how to find the right partner for your business.
In general, third-party logistics can be thought of as a combination of warehousing, transportation, and distribution services performed by a service provider on behalf of a company that produces goods. The logistics provider’s services are usually outsourced to a third party to avoid the need for the company to have its own in-house logistics department.
Why use a 3PL service?
While many businesses have their own in-house logistics departments, 3PL services have several benefits. Outsourcing can help companies focus on their core business, increase productivity, and grow their existing operations. Outsourcing logistics can also help companies save money and reduce risk by hiring a third party to handle complex requirements like transportation and warehousing. 3pl providers may also have more expertise and streamlined processes than in-house employees. These factors can help businesses save time and money by outsourcing logistics to a third party
Examples of when you should use a 3pl logistics
A business may want to consider outsourcing its logistics if it doesn’t have the internal capacity to handle the logistics needs of the company. These may include:
An e-commerce company that can’t afford to miss out on sales due to low inventory levels
A company that needs to hire and train a large team of logistics experts.
A company that needs to comply with complex regulations or handle hazardous materials
A company that needs to manage its expensive real estate by outsourcing warehousing
A company that needs to manage its shipping rates to stay competitive Companies that manage their logistics internally can sometimes encounter difficulties that make outsourcing logistics a necessity.
Some of these circumstances include: Poor customer service. If your logistics department is understaffed, you may not be able to meet your service level commitments. Company growth. If your business is growing, it may not be able to handle the logistics needs of more customers.
A lack of specialized skills. If your logistics department lacks expertise in handling specific types of logistics, this can affect your service level and overall business.
What to look for in a 3pl ?
There are several key factors to consider when you’re choosing a third party service provider, including cost, location, and service level. Other important factors are business type, experience, and reputation.
To save money, you can find a 3pl provider that offers discounted rates or has specific contract types available. Many 3pl’s can help you find ways to save money, so make sure you ask about any discounts before signing a contract. You can also save money by choosing a 3pl provider that’s close to your business. This can help reduce shipping costs by reducing the distance goods are transported.
Finding a logistics company with high level of experience can help ensure your goods are handled in a way that meets your business needs. You should also consider the reputation of a potential 3pl.
When you choose a third party logistics company, you’ll want to make sure it has the capacity to handle your goods and all the goods you expect to ship. You’ll also want to make sure it has the right equipment, including storage capacity and automation tools. You should also make sure your 3pl has a clean track record, including positive reviews from customers. If possible, make sure your provider has the certifications required to handle your goods. These can include a USDA Organic certification, a GSA contract, a BRC certification, and more. Choosing a third party logistics company that meets your company’s needs can help ensure your goods are handled correctly. A good third party logistics company will also be able to communicate with you regularly and keep you in the loop about any issues or changes that may come up.
A 3PL management solution can help you automate and manage your logistics. It’s software that connects to a 3PL service provider and your business to help you monitor and manage your logistics.
3PL management solutions can help you save time by automating manual processes and enabling you to set up alerts and notifications. Some 3PL management solutions also have analytical tools that can help you understand your logistics and make adjustments as needed. A 3PL management solution can help you achieve greater visibility into your logistics and save time and money.
The bottom line
Third-party logistics is a service that helps companies by handling their logistics for them. Outsourcing logistics can help businesses focus on their core business, increase productivity, and grow their operations. Many 3PL companies offer discounted rates and volume discounts, and some also provide analytical tools that can help you understand your logistics and make adjustments as needed.