3P Logistics helps power companies around the globe.
In this article, we will provide you with a clear overview of what a 3P logistics provider does. We’ll help you answer the question of what is 3P logistics or what is meant by 3PL logistics. We’ll demystify how they work and what benefits can be accessed by working with a 3PL company.
3P Logistics or 3PL is short for Third Party Logistics. These are simply logistics services provided by a third party. These third parties are companies that specialise in transportation, warehousing, distribution, fulfilment services and supply chain management.
The customer whether they’re in retail, manufacturing, eCommerce or maybe export can outsource these types of distribution operations directly to a 3P logistics company. The 3P logistics company then either provides an end-to-end range of services, maybe just one of the above or anything in between.
3P logistics companies are an important cog in the supply chain mechanism and provide services for businesses both large and small all around the globe. Some 3P logistics companies specialize in certain areas of the supply chain whereas others offer a more comprehensive range of services.
What services do 3P logistics providers offer?
One of the foremost services associated with a 3PL company is warehousing. Running a warehouse is extremely complicated and involves many elements to make sure it runs smoothly. These can range from Inventory management, sortation, data exchange, reporting, IT systems integration to name just a few.
Transportation is another main service offered by a 3PL. All the goods and products stored in a warehouse are only there temporarily and therefore have to be transported to and from the warehouse in a timely manner.
Order fulfilment is a process where orders are received by the 3P logistics provider on behalf of its customers. Once the orders are received, picking, packing and all the necessary paperwork are prepared ready for the order to be shipped. Fulfilment processes have to take place inline with any service level agreements detailed in the contract between the customer and the 3PL provider.
The other service a 3P logistics provider can offer is procurement. The 3PL monitors stock levels within the warehouse using a warehouse management system or WMS. Once it has been identified that a stock level is running low, the 3PL provider would then raise orders with suppliers or manufacturers from further upstream in the supply chain.
These are all services provided by a 3PL. Being able to outsource to a 3P logistics provider allows the customer to focus more on their core business activities safely in the knowledge that their customer's products and deliveries are being taken care of. So in simple terms, a 3P logistics provider helps move products to market and can integrate with any type of sales channel providing a full suite of multichannel fulfilment and logistics solutions.
Here's a simple example of how 3P logistics works
So you’ve created an incredible product and by leveraging your many sales channels the orders are coming in thick and fast. Working with a 3PL provider often requires that you have integrated your production or ERP system with their IT system. IT systems are usually cloud-based order fulfilment platforms that give access to customers at their end.
The first thing that happens is to book a batch of your products ready to be processed by the 3PL provider. Depending on how comprehensive your level of services it could mean that at this point a collection is arranged by your 3PL. Products being sent could come from your factory or possibly from one of your suppliers, this might be the case if you run a drop-shipping business.
Products are received by the 3P logistics provider where they would perform a quality control review. Once the products have been reviewed the 3PL then works its magic and performs all the necessary tasks you’ve agreed with them in the contract. This could be sortation, cross-docking, storage, consolidation etc.
The 3PL’s order fulfilment system can accept orders from any of your sales channels. That could be eBay, Amazon, your own eCommerce storefront or your retail outlet. Orders are then picked and packed and can be tailored to your guidelines with custom packaging or branded labels, inserts or delivery notes.
3P logistics companies have access to the very best shipping rates from all over the world. Transportation costs can be kept at a minimum by utilising the 3PL’s experience in acquiring the best deals and from the sheer scale of their operation.
An email and tracking number are sent directly to your customer keeping them updated with the order process. By using these services you can appear to offer the same standard of customer service as the likes of Amazon even if you are a small company. 3P logistics companies offer the same quality of service to both large and small customers. Your products will be processed in the same way, they’ll be handled by the same equipment and given their own storage location within the warehouse pallet racking system.
Returns and exchanges are another way a 3P logistics provider can make you stand out from the crowd. Using the same cloud base order fulfilment platform a 3PL can manage returns with just the same efficiency as the original order. Items can be returned to stock or moved through used/nearly new sales channels or recommerce as it is now being referred to.
Conclusion
By outsourcing your physical operations to 3P logistics you generate more time to focus on your core business activities. You can then streamline your operations and extend customer reach. Solutions can be tailored to your business making them unique to your operation
