Many companies today do not have enough resources to store and distribute all their goods. A proper solution for this is to outsource logistics through a 3PL supplier.
3PL or third-party logistics, also known as outsourcing logistics, refers to services provided indirectly by a company to companies that need assistance in the field of logistics. In addition to logistics, it also handles warehousing, order preparation, and freight transport tasks. Thus, a 3PL service provider is responsible for processing and delivering the client's items to the customers. In short, a 3PL service provider acts as an intermediary between the company and its customers.
Here's everything you need to know about third-party logistics!
What is 3PL Logistics?
3PL is the abbreviation of Third-Party Logistics. If you wonder, "What does 3PL mean?", it simply refers to "a mode of transport that allows your company's logistics to be done with the help of third parties as the name suggests". The logistics service provider manages warehousing, order picking, shipping, and other services on your behalf. 3PL is ideal, especially for small companies or startups. 4PL is recommended for medium-sized and larger companies since it deals with the entire supply chain. However, 3PL is also useful for webshops with mid to high-growth ratios and manufacturers and wholesalers.
Logistics functions include handling inbound cargo, addressing customs clearance, storage and distribution. A 3PL company can also take care of returns logistics. So, 3PL logistics companies provide many services as well as transportation. Therefore, a 3PL company has a comprehensive network of logistics service providers. Thus, you can use 3PL for your company's operational logistics.
What are the Advantages of Third Party Logistics?
Using a 3PL provider provides various benefits. The advantages of using third-party logistics, from outsourcing to improving the customer experience, can be listed as follows:
- Its most significant advantage is to allow you to outsource logistics through 3PL and focus on other aspects of your business, such as sales, marketing, and product development. In 3PL, outsourcing saves you more time and resources.
- Third-party logistics affects shipping companies more than it affects individual shippers. 3PLs can negotiate prices based on volume, and order frequency by partnering with carriers on behalf of multiple customers. Using a 3PL to manage all or part of your supply chain also gives you the freedom to invest in other important areas to grow and improve your business.
- Most companies experience fluctuations in demand throughout the year. Thus, 3PL logistics allows you to effectively manage the budget without having to spend when you don't need to.
- Customers typically expect next-day or same-day shipments. If you use a third-party logistics provider, you can offer fast shipping regardless of where the order is shipped, thanks to access to the extensive distribution network of 3PL. This will provide you with a better customer experience.