Guide to 3PL: Why You Need It to Scale Your Business
A 3PL abbreviation stands for third-party logistics. Today, this is a hot topic among business owners as anyone stands to improve their supply chains to obtain the greatest gains from their activities.
What Is 3PL Logistics? Brief Definitions in Simple Words
3PL means the outsourcing of logistics functions to an external company that will run your supply chain providing everyday operations. Primarily, it deals with 3PL warehouse management and transportation procedures.
Your provider can offer returns management, customs brokerage, distribution center premises, or freight forwarding to you. Such services are in great demand among both big and small businesses as they allow the customers to focus on their basic activities without dissipating their efforts.
The main steps of the 3PL process can be described in the following way:
Any order should be carefully inventoried before it is moved to the place of storage. It is necessary to avoid the errors in the documentation that can lead to losses and short-deliveries then.
The next step is putting the goods in the provider’s warehouse. After receiving the goods, our specialists allocate them in an appropriate fulfillment center. Each stock keeping unit is stored separately in an eligible container or is put on a shelf. Your 3PL provider should have storage capacities that satisfy your demands as storage facilities may be different. Pay attentions to the storage conditions that your 3PL provider can offer to you. The main difference between 3PL and common warehousing is that 3PL operates a logistic center itself while warehousing companies just provide you with some space in a warehouse.
This is the first point in an order fulfillment process and it means finding and taking goods out from a warehouse to fulfill a client’s order.
All items that were picked should be packed then before shipping. The type of packaging material depends on goods that have to be packed, their size, weight, and rigidity.
Then a 3PL provides shipping of your goods and it is possible to stick shipment labels on the packaging on your behalf. Providers find the best carrier with the best prices to reduce costs. 3PLs often cooperate with the fastest carriers like DHL, USPS, or UPS. There can be various shipment options with different speed, time, or volumes depending on your needs. Most 3PLs provide their clients with the ability to track their shipments.
Sometimes buyers return their purchases to retailers for various reasons. When this occurs, 3PL providers direct the process of returning, restocking, or withdrawal depending on the item’s condition and client’s return policies. Your provider can also prepare return shipping labels for your buyers. It will be very convenient for buyers to track the status of the returned item.
3PL Logistics in the USA and Europe
Look at this list of the top European 3PL companies that were recognized as leaders in 2021:
|Company Name||Country||Total Profits (US$ Millions)|
|DHL Supply Chain & Global Forwarding||Germany||28,453|
|Kuehne + Nagel||Switzerland||25,787|
All these companies demonstrated the best results in 2021 and we’ll see if they will keep their competitive edge in 2022. Compare them to their US counterparts and their results:
|Company Name||Total Profits (US$ Millions)|
|UPS Supply Chain Solutions||11,048|
|Transportation Insight, LLC/Nolan Transportation Group||4,270|
WELL PACK is not on this list yet but we do our best to satisfy the demands of our customers. We offer a full range of services related to order processing. WELL PACK also runs a wide network of warehouses and distribution centers in 9 European countries and is ready to extend its geographical presence. Our clients can enjoy fast operations, industrial innovations, and professional approaches. We pursue the “3PL logistics near me” concept and are focused on the local customers.
We provide all our clients with such services:
- Pick and Pack
- Reverse logistics and returns management
- Fulfillment for E-commerce
- Value added services
- Pallet and package cross dock
- Packing and dispatching consignments
- Goods classification
- Adding flyers and gifts to packaging
- Printing and labeling
- Group-packing of several products
- Wrapping, covering of goods
- Availability of non-standard packaging
- Manual operations, if necessary
- Quality control
- Customized services
- Pallet Storage (standard or oversized)
- Storage of all type cartons (small, middle, big size)
- Storage of extraordinary volume products
- Washing of Reusable Plastic Packaging
3PL and 4PL: This Is Not the Same
To put it simple, a 3PL deals with the shipments while a 4PL controls the entire supply chain. 4PL providers have more rights including all responsibilities that go along with management. This means a company that operates as an integrator and manages all resources, facilities, and workflows to set up the seamless performance of the company’s supply chain. It is involved in any aspect of the work and organize all other participants.
3PL Logistics Examples
Third-party logistics companies deal with various aspects of their main activities. Actually, things are more complicated than they may seem at first glance.
Transportation. It is necessary to coordinate freight carriers, assort cargo, and monitor the cargo movement. All these measures help to optimize costs and expenses.
Global shipping. International shipping can become a real hassle for many business owners. 3PL can help to fix all problems with customs documentation, freight forwarding, transfers from one carrier to another, shipping route disruptions. An experienced service provider will make the movement of your products simpler and much more efficient.
Information technology. To manage all these logistics processes, it is necessary to introduce advanced information technologies. 3PL providers take advantage of cloud-based systems, EDI, API, and other modern tools.
The Benefits of Cooperation with 3PL Companies
Cooperation with third-party logistics providers and delegating logistics duties to them promises multiple long-term benefits. Each business owner finds their own pros but there are also a number of common advantages that you’ll certainly get due to cooperation.
- Cost-effectiveness. 3PL provides an opportunity to reduce the costs related to warehousing, transportation, and technologies as complex services are always cheaper. Moreover, delegating these responsibilities to professionals saves your time and allows you to focus on your main business activities.
- Expertise. If your business is far from logistics, it means that you have to deal in the field where you can experience a lack of resources and knowledge. If you have a small e-business, you are hardly logistics-savvy as far as you need to be for being successful. Best 3PL for ecommerce means optimization of your supply chain.
- Greater coverage. 3PL companies can offer an expansive network of fulfillment centers all over the world. This helps to be easily introduced to new markets.
- Scalability. Your business may rapidly grow, and it is not easy to adjust your logistics to its growth. You’d have to think about space, fleet, equipment, and staff. Professionals have all resources to lend you a helping hand no matter what size your business is currently.
- Customization. 3PL services are based on your specific demands.
How to Choose a Good 3PL Provider
To find a proper third-party provider is a crucial step towards your success. This task is not so easy but there are some things you should pay attention to.
- Estimate your trading volumes. Could this very firm manage all your goods flows?
- Read the opinions of their clients. Are they satisfied with their performance? What are the usual problems? How does the company fix these problems?
- The chosen company should utilize technologies compatible with those that are introduced in your business.
- Think about what value-added services are required for your business and get to know if your front-runner can provide them.
It’s no wonder that 90% of Fortune 500 companies benefit from 3PL. They are counting their money and any business owner can take advantage of such services too.