You may have heard the term “3PL” — but do you know what it means? More importantly, do you know when or how to use it in your supply chain? Almost every shipper relies on a blend of third-party providers to manage inventory, fulfill orders, and transport freight.
If you’re not leveraging 3PLs, you may be missing out on opportunities for streamlined shipping, increased capacity, and better rates. In this blog, we’ll explain what 3PL is and highlight their importance in supply chains and logistics.
What Is 3PL?
The term “third-party logistics” (3PL) describes the practice of contracting out the administration of inventory, warehousing, and order fulfillment of e-commerce logistics to a third-party company. 3PL providers use the infrastructure and resources required to automate retail order fulfillment, allowing e-commerce firms to do more.
A 3PL is a service provider that helps a company with a variety of supply chain tasks. These services can involve creating supply chain plans, granting access to technology, and brokering, shipping, storing, or packing a business’s freight.
It’s crucial to remember that different 3PLs concentrate on different facets of supply chain management, hence their methods of operation vary. The majority of 3PLs are non-asset-based, which means that instead of holding tangible equipment, they organize logistical services for shippers. But some 3PLs do own properties, such warehousing facilities utilized for fulfilling online orders.
Companies frequently decide to outsource all or a portion of their supply chain management to third-party logistics (3PLs) because they can provide cost savings, increased efficiency, and expertise over managing these operations internally. Businesses may concentrate on their core competencies while guaranteeing efficient and effective management of their logistics by utilizing the services of a 3PL.
What Are Three Types of 3PL Providers?
1. Transportation: These 3PLs focus on transporting goods from one location to another. They handle deliveries to customers and may not offer services for returns and exchanges. Examples include shipping carriers, bike couriers, and freight companies.
2. Space management: These 3PLs offer storage solutions such as warehouses and fulfillment centers. They may also provide distribution services, managing inventory and restocking returns.
3. Full-service: These 3PLs offer end-to-end logistics solutions, including product creation and distribution. Some also provide additional services like supply chain management, analytics, IT solutions, and customer service.
How Does a 3pl Work?
Let’s say you run a shoe company that designs and manufactures footwear. Instead of handling every aspect of the supply chain on your own, you decide to partner with a third-party logistics (3PL) provider.
Here’s how the process might work:
- Inventory Transfer: You send your shoe inventory to the 3PL’s warehouse, either from your own storage space or directly from the manufacturer.
- Warehouse Organization: Upon receiving the shoes, the 3PL organizes each shoe style, size, and color in its warehouse, ensuring efficient storage and retrieval.
- Order Processing: When a customer places an order on your online store, the order details are transmitted to the 3PL automatically through integrated software or manually by your team.
- Picking and Packing: A worker at the 3PL facility picks the ordered shoes from their respective locations in the warehouse and carefully packs them in boxes for shipping. They ensure that the correct items are included in each order.
- Shipping: Once packed, the shoe shipments are handed over to a local shipping service provider, such as DHL, UPS, FedEx, or USPS, for delivery to the customer’s address.
In this scenario, the shoe company benefits from outsourcing its logistics operations to the 3PL provider. By leveraging the expertise and infrastructure of the 3PL, the company can focus on designing and manufacturing high-quality shoes while leaving the intricacies of inventory management, order fulfillment, and shipping to the logistics experts. This arrangement allows the shoe company to streamline its operations, reduce costs, and provide a seamless shopping experience for its customers.
Benefits of Working With a 3PL
The 3PL market is huge, worth about $60 billion, and it keeps growing every year. Businesses turn to 3PL providers for several key reasons:
- Network Scale and Reach: 3PLs consolidate the fragmented truckload market, making it easier to connect with many small and mid-sized trucking companies that make up the industry.
- Responsive Capacity: Unlike asset carriers limited by their fleet, 3PLs can find solutions regardless of equipment availability or location.
- Flexibility: Outsourcing logistics bridges competency gaps and allows for easy scaling up or down based on shipping needs.
- Service Line Diversity: Many 3PLs offer a range of logistics services, simplifying procurement for businesses with varied shipping needs.
- Full Coverage in Your Supply Chain: 3PLs can fill gaps in a supply chain, even for companies heavily reliant on asset carriers.
- Access to Technology: Advanced digital platforms and integration options offered by 3PLs help streamline logistics processes and improve efficiency.
What is 3PL – A Summary
For e-commerce companies, managing packaging and shipping on their own can provide substantial costs and hurdles, particularly given Amazon’s stronghold in the retail sector. Online retailers need to offer quick and affordable shipping choices if they want to stay in the competition. This is where Unilogic Group, a reputable 3PL with its headquarters in Chicago, becomes useful.
The supply chain management experts at Unilogic Group provide customized shipping process optimization solutions for the highest levels of financial and logistical efficiency. Ecommerce companies can gain from expedited order fulfillment, lower shipping costs, and more customer satisfaction by utilizing their knowledge.
What distinguishes Unilogic Group is their dedication to comprehending the particular needs of every customer and offering tailored services to efficiently satisfy those needs. Their vast network of transportation partners and cutting-edge technological platforms guarantee dependable and seamless operations and delivery of goods.
In addition, Unilogic Group’s advantageous position in Chicago, a significant center for transportation, gives companies access to quick and effective shipping routes. eCommerce businesses can obtain a competitive advantage in the market by collaborating with Unilogic Group to provide their clients with easy-to-use and reasonably priced shipping options.
