What is 3PL

You might have wondered, what does 3PL mean?

3PL is an acronym for third-party logistics, a logistics service provider that focuses on dealing with the movement of goods outside the core business. 3PLs are logistics service providers that specialize in moving goods that are not part of their inventory. Instead, they offer value-added services that focus on the entire supply chain to get the end product to its buyer as quickly and efficiently as possible.

A 3PL can also be called a logistics service provider (LSP).

The 3PL business model dates back to the 1980s when the concept of outsourcing was picking up steam in the business world.

3PL Order Fulfillment Categories

The 3PL companies cover a wide area of services of the supply chain. But not all the 3PLs offer every assistance. Based on their field of specialization and team of experts, they provide one or more logistics fulfilments.

The 3PL organization may provide warehousing services, transportation services of goods, inventory management, freight forwarding, or any combination of these elements. This article will explain what a third-party logistics or 3PL is and the difference between a third-party logistics company and a freight forwarder.

Warehousing Services

3PL warehouse service is essential for companies that can’t keep up with the demand of fulfilling orders. Most third-party logistics companies offer essential fulfillment services of 3PL warehousing such as storage, fulfillment, pick and pack, shipping and returns.

warehousing services

Additionally, most of these 3PLs give sellers the option to outsource all or most of their fulfillment and warehousing needs. Then such companies manage sellers’ transportation needs by identifying which shipper to use, managing the relationship with the shipper, and optimize the process on the seller’s behalf.

Transportation Services of goods

3PL fulfillment in the form of third-party shipping is carried out by 3PL logistics when the seller outsources the large shipments or even smaller from one country to another. This is called freight forwarding. The logistic companies integrate with shippers like UPS, FedEx, USPS, Aramex, etc.

3PL logistics also manages other transportation services. Those shipments are handled and have to be transported from the manufacturer to the warehouse or the logistic company’s warehouse to the buyer.

Inventory Management

Some largest eCommerce companies outsource all their business’s inventory management, finance control, freight forwarding, accounting, etc., to 3PL fulfillment companies. So it depends on the size and capacity of Logistics Company and which services it provides to its clients.

For now, we shall discuss in detail the most common, primary, and intrigued warehousing service.

What is 3PL Warehouse?

Being a business owner, you must know how it feels to rely on a 3PL company and leaving all your operational tasks to them. It is a significant relief, no doubt!

These companies always add benefits to business growth and customer retention.

Third-Party Warehouse Services

You can take advantage of third party warehouse services in the following ways:

  • Receiving

Receiving goods is the foremost step in which your companies’ products are added to the 3PL warehouse so that the orders would get fulfilled and shipped on time.

They will also manage the inbound shipments from the manufacturer and the freight forwarding process, which includes organizing and managing them. For this job, they use freight forwarding companies. This way, they can get your products out faster and to customers more efficiently.

A 3PL company is considered the best if it has appropriately integrated management software and tracks the product where it is placed when they need to fulfill the order. Thus, it makes the process much easier and on time.

  • Picking

When the customer successfully places an order, the fulfillment process begins. Known as picking, this is when a 3PL fulfillment company carries out the charge. Once the order is made, it is then sent to the 3PL warehouse, identified, and picked from the storage space.

A third-party logistics company’s role must be proactive so it can carry out all kinds of orders, whether B2B order fulfillment or B2C (a type of eCommerce) 3PL fulfillment, all the complexities, variation of sizes, and shipment type must be taken care of very professionally.

  • Packing

Among all the basic logistics business rules, packing is very critical. It determines the seller’s presentation of the product. Therefore, 3PL Company should follow the best possible criteria of packaging.

Organizing and preparing for packaging is a part of this process.

Once an order is finalized, the seller’s products are prepared for packaging. The shipper will work with the seller to identify the most cost-effective way to package their products during the setup process. They’ll ensure that sellers’ items are secure, attractive, and packaged optimally.

  • Shipping

Shipping is a costly step because of several shipping options per carrier and high competition among shipping companies. To stand out of the crowd, a 3PL company needs to be very reasonable, timely, fastest, and safest, offer significant cut-offs, and must be reachable anywhere around the globe.

Third-Party-Warehouse-Services

3PL companies design their strategies to cope with the market competition.

  • Returns

Suppose a customer wants to return the item for any unfortunate reason; a well-performing 3PL company knows how to tackle the situation. First, it connects with the manufacturer and asks them how to satisfy the customer demand nicely.

The company manages all the documentation of the returned orders.

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3PL Advanced Services

To gain the client’s trust for future long-term partnerships, some giant third-party logistics companies offer value-added services, commonly known as VAS. These services are correctly streamlined and provided if requested by the manufacturers.

A good 3PL partner can help the businesses grow at a considerable pace!

VAS are:

  • Customization

To add a more personal touch of the manufacturer, a 3PL company laser-write manufacturer’s name on the product is called customization.

Manufacturer’s Packaging

In this case, the manufacturer sends the product, wrapped separately, to the logistics company, where its staff assembles it. Thus, it saves time for the manufacturer.

  • Product Disposal

The returned or unwanted items are disposed of by the 3PL company or recycled if required. Thus, they perform the product destruction in a cost-effective and environment-friendly manner.

  • Kitting/Assembling

In this service, many SKU numbers are combined to get a new SKU. The company receives a single unit by such combinations. And it happens especially for sale season or promotions.

3PL vs. 4PL

A 4PL adds a buffer between a business and a 3PL.

Many e-commerce businesses outsource logistics and shipping to a third party, but if they use a 4PL, they will have one more separation layer. A 4PL is a company that manages and arranges to ship for a client. In addition, they offer end-to-end supply chain management, including 3PL services, manufacturing, and more.

4PL negotiates the 3PL network nationwide and finds the best merchant according to the client’s needs and budget.

They operate on a cloud-based warehouse management system (WMS) to facilitate the 3PL merchants to monitor their inventories, management, supplies.

Conclusion

Logistics is a field that encompasses a wide variety of businesses. From retail to manufacturing, from transportation to warehousing, logistics touches every business and industry in the world.

This is why a 3PL (Third Party Logistics) company can help companies of any size. They can help you get your products from point A to B at the lowest cost possible.

3PL (third-party logistics) services help you manage your supply chain more efficiently.

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CSG 3PL warehouse Melbourne is a cutting-edge 3PL – third-party logistics Melbourne Company and contract logistics solution that streamlines your organization’s supply chain and warehouse management.

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By utilizing the industry knowledge, they offer full-service 3PL warehousing and integrated logistics – ensuring total compliance with the highest quality service standards. CSG3PL designs and implements innovative contract logistics solutions for market-leading companies in a wide range of industries.

FAQs

A freight forwarder specializes in moving goods, either within the same company or between different companies. On the other hand, 3PLs specialize in logistics, with many more services than freight forwarders. For example, they often offer warehousing and distribution services as well as arranging transportation.

Third-party logistics advantages and disadvantages can be summarized as:

Pros: Saves time and money, better exposure of industry expertise, expands your area of customer reach, more customer service options.

Cons: Less inventory control, need an initial investment to hire a 3PL, risk of bad customer experience.

Third-party logistics examples are:

Courier, parcel, express services, shipment by sea, air, and freight forwarders are all 3PL categories.