What is a 3PL? Third-Party Logistics Definition, Process & Resources
Third-party logistics (3PL logistics) is a term used to describe a company that provides outsourced, specialized logistics services for other companies. These include transporting goods by air, sea, or ground transportation; storing goods in warehouses; and managing inventory. The 3PL industry offers many benefits to small and large companies alike. For distributors faced with increasing regulations, unpredictable economies, and changeable consumer demands, outsourcing your business processes might be the perfect solution you’ve been looking for.
What are the Benefits of Third-Party Logistics?
There are several reasons why businesses choose third-party logistics providers over investing in their own logistical facilities. The top three benefits of 3PLs can include: increased efficiency at lower costs Improved customer service through better handling of logistics Increased flexibility with customized distribution services.
Increased Efficiency at Lower Costs As the 3PL providers have specialized equipment, facilities and employees, they are able to offer a wider range of services at a more competitive price. 3PLs also benefit companies because their dedicated employees focus just on your company’s needs. This means that you don’t have to invest in expensive equipment or staff training required for general operations but can still enjoy lower prices. They can save time as well since goods don’t need to be moved from place to place as they would if your business were using its own trucks and warehouse space – everything is done for you! Third-party logistics service providers will work directly with customers, so all deliveries arrive on time and as expected. By packing and shipping goods directly from the third-party logistics service provider’s facilities, there is also an opportunity to eliminate unnecessary internal processes such as receiving, and processing purchased parts. This way, your warehouse doesn’t need additional staff or space for these processes.
Improved Customer Service Through Better Handling of Logistics 3PL providers can provide major benefits to smaller companies because they support a wide variety of services and clients concurrently with no impact on their core business operations and management practices, and without having to hire additional employees or invest in new equipment. They can handle all types of product shipping that might be too expensive for small companies themselves. For example, international shipments require special licenses which many small businesses don’t have access to – but not 3PL logistics companies. 3PLs can also manage time-sensitive, cut-off logistics for pharmaceuticals, e-commerce orders and other products which require certain shipping deadlines to be met.
Increased Flexibility with Customized Distribution Services:
The ability to customize different aspects of the supply chain is another significant benefit of using a 3PL. Rather than spending resources on developing your own quality control system or risk management plan, this expertise can be outsourced instead. This enables your business to focus its attention and resources elsewhere while still reaping the benefits of improved processes and lower costs associated with third party logistics. When you choose a third-party logistics service provider, you gain many perks beyond better prices and streamlined distribution: access to warehouses around the country is a major plus, as you don’t have to invest in space yourself. There is also a wide range of outsourcing options for receiving and processing orders from suppliers, shipping those goods out again, tracking the shipments, and providing warehouse management. 3PL providers can handle full order fulfillment or just your storage needs – whatever works best for your business! Another significant benefit is lower insurance premiums as most third-party logistics companies are insured against damages with an aggregate limit of up to US$25 million per occurrence. Not only does this save money but it ensures that your products will be covered no matter what happens during shipping or storage. Quality international freight forwarding services aren’t easy to come by, which makes using a third-party logistics service provider a great option. You don’t need to spend valuable time and resources developing the necessary infrastructure, expertise or training required for comprehensive supply chain management. Instead, you can focus on your core business and allow a 3PL to handle the logistical aspects of transporting goods and delivering them as expected.
3PLs provide major benefits such as improved customer service, increased flexibility with customized distribution services, access to warehouses around the country, insurance against damages up to $25 million per occurrence and quality international freight forwarding services.
About The Author:
This article was written by Cargo Logic’s logistics specialist Nadia Vakilova. Nadia is an alumnus of McGill University in Montreal, Canada where she studied Business Administration Management at theaters Faculty of Management and holds a post-graduate degree in International Business.
