Third party logistics, or 3PL, is a great asset for your business. In addition to saving you time, it will be an economic asset that will also save you money in the course of your daily business operations.
This is all the more true for companies with a stable consumer base and a constant demand for products, and the advantages listed below are likely to outweigh any potential disadvantages. Collaboration with a logistics service provider, however, does not benefit all companies. Small businesses that do not yet have large production volumes or even a large inventory will not enjoy the same benefits as a larger business.
What is a 3PL?
Third Party Logistics (3 PL) corresponds to a third degree of outsourcing of a company’s logistics activities.
At this stage, the company subcontracts a set of logistics-related activities. In addition to basic operational logistics services, such as transport and storage (1 PL and 2 PL), 3 PL also offers value-added activities, not only for the flow of goods such as order picking, labelling or assembly, but for the flow of information such as customs or stock management.
Third-party logistics, or 3PL, is therefore a service provider that manages the operational logistics of shipments, from warehousing to distribution. This allows owners to devote themselves to the core activities of their business, thus ensuring the sustainability of their business and the strengthening of their profit/investment ratio.
Advantages of 3PL
Working with the pros
As an e-commerce business owner, your specialty is probably not logistics. It’s your job to present products to target customers, refine products, and deliver positive experiences that convince customers to return.
Delivering inventory to a customer is a key piece of the puzzle, but it doesn’t always fall into the wheelhouse of an e-commerce site owner.
The good news is that shipping and order fulfillment optimization are standard 3PL specialties. You can build your team, but because you are not focused full-time on fulfillment, you can invest more time in a comprehensive strategy to grow your business. In return, you will probably obtain better results in various aspects of the business, including logistics, using a 3PL.
A 3PL manages several aspects of your company’s information technology. These digital tools allow 3PLs to increase the visibility of all the supply chain processes they manage for your business, as well as the transit of shipments. 3PLs use technology to manage the following business operations:
Transport, Warehouse operations, E-commerce, Customer Relations
This is perhaps one of the most stressful aspects of a business endeavor. A 3PL can manage your global shipping activities to free up time and financial resources to fund these processes even more. They will ensure that all commercial compliance requirements are met and will closely limit the costs of the process. A 3PL will ensure that all transactions are executed in accordance with the plan. They can manage:
The Shipment of Freight, Consolidation, Customs
3PL companies work with carriers in your location to optimize freight shipping routes and strengthen Batch Freight (LCL), meaning Truck Freight (LTL). Thus, they can control the financing of freight and the associated administrative formalities, such as insurance. They also cooperate with private fleets for these purposes. All of this helps lower the cost of moving your freight and develops adaptable strategies to overcome supply chain challenges.
When is a 3PL suitable for your business?
If you’ve never worked with a 3PL before, this can seem like an expensive solution to a workflow problem. After all, picking, packing and shipping orders from your warehouse or physical store can be a cheaper option than using a third party.
However, it is wise to choose a 3PL before being overwhelmed by order growth. Dealing with logistics in-house prevents you from focusing entirely on growing your business.
Breaking your promises to customers can also hurt your brand. Customers have higher expectations than ever. If there is a problem in your supply chain, delivery will take longer than expected, and 13% of customers will never return.
A partnership with a 3PL can improve your business
When selecting a 3PL, be extremely thorough in your assessment of potential partners. Good third-party logistics companies can improve your business, not only by avoiding the headaches of storing and delivering orders, but also through the fast delivery times you can promise customers.
Why use 3Pl services?
Brands use 3PL services when they can no longer manage the storage, preparation and delivery of orders themselves. If your business has grown to the point where you no longer have the capacity to manage execution, it’s time to chose the right 3PL service.