What Is a 3PL?May 5, 2021
If you’ve been looking for ways to improve your order fulfillment, you’ve likely run into the term “3PL” more than once. It stands for “third-party logistics,” a service that many Ecommerce businesses use to outsource their fulfillment.
Here are the most important facts to know about 3PLs.
What is Third-Party Logistics?
Third-party logistics is the outsourcing of logistics processes like warehousing, inventory management and fulfillment. Companies that offer this kind of service are typically known as 3PL providers.
With the growth of Ecommerce, the term 3PL became well-known within the logistics and Ecommerce industries, and 3PLs continue to expand their services.
How Do 3PLs Work?
If you’ve never worked with a 3PL, what they do may seem very mysterious.
Thankfully, the truth is a lot simpler and exciting for businesses looking to improve their fulfillment! Here are the most important functions that 3PLs perform.
3PLs are great at delivering your products to customers. They work hard to create great relationships with carriers and have a lot of experience in optimizing the transportation of products. This means 3PLs can help to lower the cost of transportation, improve efficiency, and handle complicated supply chain challenges. 3PL providers also have systems that ensure connectivity to many phases of supply chain operations, which means they are usually able to provide real-time tracking for your inventory.
2. Information Systems
3PLs use information systems to manage customer relationships, transportation, and warehouse operations. The most popular tools used by 3PLs include:
- Electronic Data Interchange (EDI)
- Cloud-based systems
- Application programming interface (API)
All these tools work to provide greater visibility of your supply chain.
Benefits of Working With a 3PL
There are many benefits to working with a 3PL provider. Here are a few:
1. Expertise and Knowledge
Supply chain logistics can be complicated. All aspects, from fulfillment and warehousing to delivery, come with significant challenges. Third-party logistics providers have the experience and skills needed to handle tough logistical problems on a small and large-scale.
3PLs can also offer solutions for international shipping issues like duties, documentation and customs.
2. Save Money and Time
3PLs could likely eliminate the need for a company to invest in the technology, transportation, warehouse space and employees required to carry out fulfillment. This can save businesses a lot of time and money.
3PLs can also make companies aware of potentially costly and risky supply chain errors. For example, by using industry forecasting, 3PLs can help to save on inventory holding costs and optimize inventory levels.
3. The Ability To Scale Operations and Improve Flexibility
With a 3PL companies can scale labor, transportation and space according to their current inventory. 3PLs can also assist companies in growing within new regions. Usually, third-party logistics providers are on a constant lookout to improve supply chains and have the tools, technologies and personnel needed to do so. As such, using their services typically leads to a continuous improvement of your logistics process.
Not Everyone Can Do It on Their Own
Although in-house fulfillment is possible, it’s not something that every business can perform – and they don’t have to. Third-party logistics providers are great for bridging the gap Ecommerce businesses have between them and the logistics required to deliver their products. If you need to outsource your logistics, consider using a reliable 3PL provider like Fulfillment Works. We have the technology, staff, and years of experience providing logistics services to successfully fulfill orders.