What is 3PL?
- Third party logistics (3PL) is the function by where the owner of goods outsources numerous components of the supply chain to a 3PL company that can perform the management function of the client's customs, inbound freight, distribution, warehousing, order fulfilment and outbound freight to the client’s customers.
- Third party logistics (3PL) is a company that provides an all-encompassing service to its customers of outsourced logistics services for a part or all of their supply chain management functions.
- Third party logistics (3PL) refers to a business that provides one or several logistics related services. These types of services include distribution and transportation management, public warehousing, contract warehousing and freight consolidation.
3PL Services: What is Provided?
Warehousing
Supply Chain Management
Order Fulfilment
- The right goods
- Received on time
- In good condition
Consolidation Service
5 Reasons to Use a 3PL Provider
Reason #1
To provide supplementary supply chain support to test out new regional countries or markets where your company does not currently have a presence . This can be done without having to open a new distribution centre.
Reason #2
Companies with seasonal businesses can use a 3PL provider that allows you to scale your labour, warehousing space and transportation to provide full support during your busy business months while scaling back during slower months.
Reason #3
Using a third party logistics provider that has higher quality technology and processes than your in-house operations will help realise efficiencies with the management of your inventory and increase on-time performance .
Reason #4
By employing athird party logistics provider, you can take advantage of lower transportation rates that are provided by the 3PL firms. These firms have substantial buying power as a result of their ability to leverage load consolidation, backhaul opportunities and the volume of freight they deal with .
Reason #5
With lower risk, you can quickly build a multi-location distribution network. This can be done without the major capital investment that is often associated with building out your own network. Full support during your busy business months while scaling back during slower months.
The Benefits of Using 3PL
- Improved Customer Service
- More Flexibility and Scalability
- More Resources
- Saving Time and Money
mistakes – you will have a higher return with lower risk .This can help your business build a global logistical network at a fraction of the cost . 3PL is quicker than in-house fulfilment.
- Professional Service
- Responsiveness
Types Of 3PL Providers
- Asset Based
- Management Based
- Integrated Providers
Out major disturbances to distribution operations is a huge benefit of 3PL.
How To Choose The Right 3PL Provider For You
Choosing a 3PL can be difficult – there are so many dynamics involved in making sure you have chosen the right provider before you even begin to work together. Before you start your search for a new 3PL, ensure that you determine your own needs first. By conducting advanced research on your potential 3PLs that fit your requirements, you will ensure that you have the right provider for your business. By gathering information within the below three areas, you will be able to define your needs:
•Analyse your accounts and look at your current performance. |
•Outline your current supply chain costs. |
•Examine your existing carrier relationships and advances and/or allowances that might be made in the future. |
You then need to ask the 3PL provider for a request for information (RFI). The RFI is a detailed plan that the service provider has for your business. The RFI should include a thorough description of the areas to be outsourced. It should include:
•The scope of the contract
This should include the locations, amenities and departments of the 3PL.
•The level of performance that is required
•Information on volumes involved
Including the warehouse sizes, number of deliveries and number of items.
•The logistics tasks that will be undertaken
Including warehousing, transportation, etc.
Questions To Ask Your 3PL Provider
- Is the 3PL located near your business?
- Are your customers' demands and priorities supported by the specific competencies of the 3PL?
- Can the 3PL proficiently scale their operations to fit your companies’ changing needs?
- Does the 3PL provider offer both direct-to-consumer and direct-to-retail fulfilment and distribution services?
- Does the 3PL have a modern technology platform backing up their business?
- Does the 3PL have numerous transportation and warehousing options available to choose from?
- Is the 3PL financially stable?
- Does the 3PL have a list of previous partners?
- What is the 3PL’shistory with their partners?
- Does the 3PL have a proven track record of delivering a superior service?
- Does the 3PL have many long-term clients?
- Does the 3PL have high-quality industry references?
- Does the 3PL have the necessary expertise and experience to help you improve your company’s logistics activities?