A 3PL or third party Logistics is a type of service that allows you to outsource all operational logistics to deliver your goods to your customers. This enables you to focus on your core business operations without worrying about fulfillment and its challenges. A Third Party Logistic Company like Distribution Technology provides many of Logistic services related to your supply chain.
3PL services have exploded after eCommerce started to expand and grow. They handle the shipping of goods to your customers based on an inventory, Retail distribution, and Returns. The following section provides you a brief overview of 3pl and its different types. It also explains its advantages and disadvantages by choosing a 3PL for your business.
1. When do you need a 3PL?
When your orders grow rapidly, it is challenging to handle these orders and it might lead to failure in fulfillment. These failures affect your brand image and prevent you from focusing on your business. You need to consider a professional 3PL to effectively handle your shipment and stop worrying about fulfillment.
You need to consider to hire a 3PL when your orders per day, the cost to handle and growth potential are significantly higher than you can handle. You can weigh the costs of utilizing a 3PL for current and future orders and conclude what works out best. You can also consider the current storage and inventory costs to determine if outsourced fulfillment is a better option. Outsourcing also helps you to meet the varying spikes in your demand order and fulfillment.
2. Types of 3PL.
Depending on this size and specialization of services provided, 3PLs can be broadly classified as follows:
i. Warehousing and Distribution.
Warehousing and Distribution is a common type of 3PL. They provide services to store, pack, ship and handle returns of your orders. The speed of order fulfillment depends upon the location of warehouses from your customers. You can integrate your inventory, order management, order processing, and warehouse management systems with 3pl to get seamless, effective and automatic fulfillment.
ii. Transportation and Freight.
Transportation and freight based 3PLs specialize in transporting between locations. They transport your inventory between the factory and warehouse or a retail buyer. You need to consider the origin and destination of the location, the time frame to transfer, shipping methods used by 3PL when you choose a Transportation 3PL. You might also have to consider import-export duties in global transportation.
iii. Financial and Information.
Financial information based 3PL provides industry-specific logistics services and helps you to optimize complex supply chains. They also provide inventory management, cost accounting, and freight auditing. These types of 3pl are highly beneficial when your revenues have scaled to eight or nine figures.
iv. Growth 3PL.
Some 3PL providers help their customers with their front end sales and marketing efforts. This 3PL helps you glow to increase your sales by brand development, multichannel product promotion, build online stores and conduct social media marketing to expand your market reach and sales.
3. Benefits of 3PL.
Third-party logistics services help you to significantly scale your space, labor, and transportation as per your inventory needs. Businesses that have ups and downs in the order quantity benefit by utilizing 3PL to meet their varying demands for resources. Some other benefits of 3PLs include:
i. Reduce cost and time.
3PL services reduce your burden to own space and inventory and thereby reducing their cost. They also negotiate better freight prices and provide low warehousing costs. They handle fulfillment quickly using their wide networks and transportations. These savings are passed on to you to reduce your shipping cost and time.
ii. Flexible scaling.
Third-Party Logistics help you to manage ups and downs in resource demands more effectively. You need not commit any capital or make any investments to handle your fluctuating demand when you hire a 3PL.
iii. Better customer experience.
Customers experience quick and standard fulfillment by a Third-party Logistics provider. their wide distribution network enables you to ship any product to your customers quickly and professionally.
iv. Explore new markets.
International 3PL allows you to explore new market regions that were once hard for you to reach. You can test new markets without major investments or financial commitment and explore new opportunities to expand your business presence.
v. Reduce risk.
When you hire 3PL, you need not worry about the shipping delays and any other challenges to fulfill your order. They take responsibility to make alternative arrangements to fulfill your order as quickly as possible. They also protect your products from getting damaged or lost.
vi. Access to expert knowledge.
The third-party Logistics company has vast experience and complete know-how in fulfillment warehousing and shipping. You can utilize their expert knowledge and experience to handle all your fulfillment. They provide reliable, fast, efficient fulfillment services for your product delivery.
4. Disadvantages of 3PL.
A 3PL has its own disadvantages when you utilize their services. Few of them include lesser control of delivery, large upfront investments, and limited quality control. You may not develop the skills and your infrastructure for your customized shipping and may have a hard time find a trustworthy 3PL.
From the above sections, you have understood how a Third-party Logistics provider can help you streamline your supply chain and reduce cost and time. A 3PL significantly enhances your supply chain and help you to focus on your growing and improving your core business process