What is a 3PL? A Complete Guide to Third-Party Logistics

As your company works to build up its supply chain network, you may need the services of a 3PL to improve operations and ensure more reliable delivery of goods to your customers. Here’s a complete guide to third-party logistics.

A 3PL or third-party logistics company takes care of supply chain tasks or arranges them for companies that lack the experience or resources to handle these functions on their own.

A third-party logistics company has experience with a myriad of supply chain duties that you would rather not handle yourself, or because you recognize that you need assistance. Here are some of the main activities of a 3PL firm:

Efficient inbound shipping keeps your supply chain smooth and cost-effective. A 3PL partner can coordinate with suppliers to make sure inventory arrives on time, reducing restocking delays and storage costs. With inbound visibility, you can track shipments and plan ahead to keep operations agile.

The third-party logistics company receives products from sources such as overseas or onshore suppliers, or your own production site. The 3PL team verifies the accuracy of the inventory, sees whether any items are damaged, and notes if anything is missing. At this point, they log the received items into their inventory management software system and then place them into storage in the warehouse.

A crucial function of your 3PL is to handle warehouse tasks. Ideally, you will work with a company that provides warehousing services in strategic locations, such as the Midwest, to ensure your orders ship out as quickly as possible, traveling the shortest distance. Warehousing services include maintaining environmental conditions per your requirements, such as low-humidity or cold storage for food items and nutraceuticals.

A 3PL manages outbound shipping by coordinating with carriers for timely deliveries, updating tracking information, and optimizing routes to reduce costs. This improves delivery efficiency without the need for in-house logistics management.

When customers send back products, the 3PL receives and inspects them to determine whether they are suitable for reselling, or need to be recycled or destroyed. They also update the inventory system to reflect the status of these returned items. During returns processing, the 3PL will restock items as needed or arrange for reshipments.

Do you sell to retail companies? Or is your company designed for B2B sales? Perhaps you focus on e-commerce with D2C transactions and need specialized kitting and bundling to put together packages quickly and efficiently. Regardless, when you do not have the in-house expertise, knowledge, and experience to take care of your own logistics, it’s time to consider using a 3PL company.

Here are some common reasons to start using a 3PL company today:

A 3PL company has expertise in expediting shipments, experience optimizing fulfillment tasks, and benefits from having developed an efficient supply chain. It’s challenging for companies to create their supply chain network at the level of a 3PL, which is a compelling reason to partner with third-party logistics experts.

You will want to outsource supply chain tasks to take advantage of the 3PL company’s specialized knowledge of carriers, route optimization, returns management, and returns, so you can focus on your core capabilities.

As your company grows and more customers order products, you can rely on the 3PL to grow too, adding picking and packing staff as needed to expedite shipments. For example, you test a crowdfunding campaign and receive an overwhelmingly positive response that will make it challenging to fulfill orders on your own. However, the 3PL is accustomed to fluctuating demand and can help you deliver items as your company grows in size and scope.

If you’re a startup company, you may want to select a 3PL as soon as you have items to sell, instead of going through the hassle of setting up your own warehouse facility.

While you may be familiar with the ins and outs of domestic shipments, setting up a global supply chain can be a headache if you are just getting started selling products on an international scale. Instead, choose a 3PL with a proven track record in international shipping, so you can widen your customer base without interruption.

If your warehouse is too small to accommodate a growing product line or retail inventory, or if you lack sufficient staff to quickly pick and package items to meet customer demand, it’s time to consider a 3PL partner.

When your time and resources are in short supply, it’s prudent to find a 3PL to outsource all supply chain tasks, from receiving your inventory and storing it, logging the details in the inventory management system, and quickly picking and packing items as orders arrive. Is your team prepared to handle a mandatory product recall quickly and efficiently? If not, it’s in your best interest to work with a 3PL partner now.

A 3PL or third-party logistics company tends to focus on order processing and delivery logistics. In comparison, a 4PL or fourth-party logistics provider is in charge of optimizing your supply chain and will also offer consulting services to ensure logistics go according to plan. 4PLs outsource the physical work of managing logistics to a 3PL.

If your organization needs assistance developing a robust supply chain and ensuring orders get to customers as quickly and efficiently as possible, you can rely on B&C Logistics to handle the details. With years of experience in the industry, we know logistics and are standing by to assist you. To learn more, please contact us today.