Supply chain responsiveness is extremely important when it’s time to get your products to market. With all the issues supply chain management has been facing recently, shippers are looking for ways to improve their processes. Many shipping companies have chosen to look in the mirror and fix the problem inside their own pipelines. However, fixing an internal problem can put a lot of strain on an already struggling workforce that’s under pressure to get products out. Sometimes, outsourcing just makes more sense, and that’s where a 3PL can come in and help.
What Is a 3PL?
A third-party logistics provider, or 3PL, offers solutions that keep the supply chain moving. These providers have warehouses large enough to offer a full range of fulfillment services for your business. 3PLs can handle everything from warehousing products, inventory management, processing orders, and shipping and receiving. Many also have a customer support team that processes returns and customizes orders.
A 3PL manages inbound and outbound transportation and warehousing. Whether you have an eCommerce-driven business or brick-and-mortar stores, outsourcing order fulfillment will relieve you and your team of stress.
What Is the Purpose of a 3PL?
3PL warehouses are designed for maximum speed, efficiency, and accuracy. They grow with you and pick up the extra volume as your business needs expand. They’ll also work with you to find ways to decrease your shipping costs and optimize delivery times.
To give you an example of how it all works, let’s say your business orders or makes a product. Once the product is complete, it’s sent to the 3PL warehouse, where the warehouse unloads the inventory, or in some cases kits it for customization. Once the product is logged into stock, it’s stored in a safe and appropriate section of the warehouse.
Next, one of your customers places an order on your eCommerce site. The site sends the order directly to the 3PL provider, who then picks and packs the order. The order is sent to the shipping department, which gets the product on a truck and out for delivery. If the order isn’t placed too late, some customers may even receive the shipment the next day!
Benefits of Working With 3PL
A 3PL provider may not be right for every business, but they solve several supply chain management issues. If you’ve been experiencing them first-hand, here are some benefits you’ll receive from partnering with the right 3PL.
Outsourcing and Saving Money
Outsourcing order fulfillment saves money by reducing labor costs and eliminating the need to pay rent for an entire warehouse. These are two large expenses that, when eliminated, will add more money to your bottom line and allow you to expand and some more markets.
There’s no need to keep a warehouse staff or support team for that staff because the 3PL manages your warehouse and distribution needs. You don’t have to pay for training as the 3PL supplies trained employees to take care of the entire process.
Saving Money on Freight
When you use a third-party logistics company, you can take advantage of their full truckload (FTL) and less-than-truckload (LTL) rates for moving freight. If you don’t have enough product two take up a full trailer, you can split the shipping costs with other businesses sending shipments in the same direction.
FTL rates are typically discounted, especially if you’re shipping a large number of heavy items. As weight increases, the rate decreases, and the 3PL will assist in finding the best deals for your unique freight shipping needs.
Stock Management
Third-party logistics companies will handle your inventory with care. They have amassed tons of experience in this area, and the representative handling your account can do more than just count your product. Yes, regular audits can be conducted, but a 3PL is so much more.
In addition to auditing your inventory regularly, communicating with your account manager about ways you can avoid stock-out situations will streamline inventory management. With a company that has been in the industry for a while and worked with other eCommerce with similar needs, your 3PL will have a good grasp of seasonal demands and can advise you on product replenishment and ways to improve supply chain management.
Pick, Pack, and Ship
Order fulfillment is centered around picking, packing, and shipping. These three tasks are the heart and soul of the process, and if one of them is off, it can throw the entire shipment into peril.
Once the order from your customer hits the warehouse, the picker locates it on the shelf, and the packer has the important job of selecting the right size box. An ill-fitting box can cause the product to be damaged in transit.
The packer also places protective materials in the box and seals the shipment before applying the shipping label. The packer is responsible for ensuring the correct carrier picks up the shipment for delivery.
Same-Day Shipping
There’s a lot of competition out there, and every company needs to find a key differentiator to separate itself from the herd to stand out to its customer. If a customer knows they can place an order with you by a certain time and receive it on the same date, they are likely to return and purchase from you in the future—the faster the delivery, the happier the customer.
Returns
No one wants to deal with returns – that means there was an unsatisfied customer, but making the return process easy could buy you grace from an unhappy client. Certain items, like clothing and shoes, get returned more than others, due to fit or taste, prompting the customer to send them back.
A 3PL can take on your returns, and if there is no damage, the product will be placed back into inventory and on this shelf. When undamaged products are made available for purchase quickly, other customers searching for the item will find what they’re looking for.
Outsourcing Improves Supply Chain Management
With our busy lives, there’s no need to try and do everything yourself. Burnout is real and negatively impacts how you interact with employees. To avoid going down that road, enlist the assistance of a 3PL. Many of them provide their own transportation services, which makes local deliveries much easier to fulfill on the same day. Outsourcing your fulfillment needs allows you to concentrate on other areas of the business, like sales and growth, which will lead to more capital for the business.
FAQ
It stands for third-party logistics.
Yes, they handle warehousing, order fulfillment, and delivery.
After completing training, establishing security protocols, and complying with US Customs and Border Protection Group guidelines, they can become certified.
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