Third-Party Logistics Guide:
Starting a new business is a lot of work, and covering all the details from product to marketing and getting the product into the consumer’s hands are all factors to consider. Every day presents a new combination of tasks that need to be completed in order to keep customer satisfaction at an all-time high for any company.
Logistics such as warehousing, inventory management, and order fulfillment are all necessities when creating a successful supply chain. So for companies that rely on these logistical aspects, the receiving, storing, and shipping of inventory are critical components to overall integrated growth.
Supply train management and logistics can be complicated and time-consuming for business owners. These challenges are where specialized logistical organizations, also known as 3PLs, or third-party logistics, come into play and assist with these interchanging details.
However, what exactly is a 3PL, and should you hire one for your logistical needs?
A third-party logistics warehouse, or the physical 3PL, is essentially an outsourced business that takes on other companies’ logistics and supply-chain functions. They are mass warehouses with plug-and-play functions that can cover any business’s inventory management and logistical details.
With 3PL warehouses, they stock, hold, and ship the inventory of multiple businesses by taking care of a company’s supply chain and operations centered around the shipping and receiving fulfillment services. There are also hybrid 3PLs out there that cover their own orders, as well as others.
Many 3PLs have fulfillment specialties or sub-types that can specialize in a specific vertical or industry that can include but is not limited to:
- Raw Materials
- Bulk Goods
A 3PL is not a company that only manufactures and ships its own products. Usually, companies that take care of their logistics internally have systems only set up for their specific needs and in-house functions.
Third-party logistics warehouses take on those crucial supply chain details and operations to help customers focus on the growth of their own businesses. What this translates to is everything along the supply chain can include functions and logistics such as:
- Maintaining and storing inventory in proper conditions. For example, if you sell edibles, you need a climate-controlled space to keep these consumables fresh.
- Sorting, managing and accounting for all inventory, which means that 3PLs are responsible for ensuring you have accurate inventory counts, so you don’t have to.
- Scheduling and executing the receiving, intaking, accounting, and shipping of all products associated with each business.
- Negotiating shipping rates for companies so they don’t have to do it themselves. This means a 3PL is there to save themselves and you as a business owner money by keeping up with discounted shipping rates.
- Managing reoccurring subscription boxes. Meaning that the 3PL will not only addresses the inventory but also picks and pack the boxes themselves before sending them off to the associated customer.
- On top of managing subscription services, some logistics companies will assemble products as needed depending on their contractual layouts.
Third-party logistics, or 3PL, is used interchangeably with fulfillment warehouses and centers. Companies offering these services are the same as larger-scale fulfillment companies like Amazon. Most offering services like those listed above, as well as:
- General warehousing
- Shipping and Receiving
- Picking and Packing
- Inventory Management
- Reverse Logistics (Returns)
- FTL and LTL freight shipping.
A third-party logistics company can act within several avenues, the most popular being e-commerce fulfillment. It provides all the services you need to keep your online brand thriving within the realms of customer satisfaction.
Different 3PL services companies specialize in various types of fulfillment and warehousing, as mentioned above. For example, some are equipped for cold fulfillment. These warehouses can store and ship food products that need to be refrigerated or frozen. Other 3PL companies are prepared to store and ship hazardous materials. So when choosing a 3PL for your company’s needs, the first thing to ask is what you need to be shipped.
Third-party logistics warehouses are designed to maximize speed and efficiency within your growing business. So when choosing a logistics company, always look into their track record of handling the extra volume your business may need in its expansion; that way, you have a company that grows with you.
As a business, you’ll want a provider who can successfully manage inbound and outbound transportation and warehousing and have the space and internal system to handle all your logistical needs.
Lastly, outsourcing your logistics is an extra cost that not every company can afford; however, outsourcing will inevitably save you money in the long run. Another critical role third-party logistics play is that they do the negotiating of the shipping cost for you, inevitably reducing your overall costs and delivery times. This is why when you use a 3PL company for your eCommerce and otherwise fulfillment; you get the benefit and security of experience and focus.