When you run an eCommerce business, there are various strategies that you have to take care of. In order to ensure an error-free supply chain and deliver orders on time, it is important that you accurately define the activities of every step in the order fulfillment chain.
WHAT IS THIRD-PARTY LOGISTICS (3PL)?
A 3PL is an organization’s use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services.
- 3PL providers save time
- 3PL offers scalability and flexibility
- 3PL services makes valuable expertise accessible
- 3PL logistics companies maximize the growth rate
- 3PL services improve customer service.
Outsourcing to a 3PL provider ensures you have more capital and less overhead. As 3PL thrives on efficiency, you can expect many aspects of your supply chain to improve as well.
The right time to outsource to a 3PL
- Are you fulfilling over 50-100 orders per day?
This is when you should consider a third-party fulfillment partner. A suitable partner can add value by taking this work off your plate as long as you have enough margins in your products to support a slight premium to your current shipping expenses.
- Are you running out of warehouse space for your inventory, or is your storage expense high?
We can use the storage costs better to support fulfillment. Many managers don’t consider storage as part of their fulfillment. If you are spending money on a facility or seeing increases in your service fees, get a quote from a 3PL provider and compare.
- Is your business growing or about to spike?
If you know you are entering a period when shipping order volume will spike (e.g., seasonality, running a flash sale, or are on the brink of big marketing promotion, etc.), reach out at least four months in advance.
Types of 3PL Providers
3PLs usually concentrate on one perspective of the logistics or supply chain procedure, yet the bigger corporations may oversee all.
- Transportation Based
They could handle the inventory shipment between your factory and your warehouse or between you and your buyer.
- Warehouse and Distribution Based
This is the most common type of 3PL, as they handle storage, shipment, and returns. Warehouses come in many shapes and sizes. The market is active with innovation thanks to companies like Amazon to establish two-day, same-day, and next-day delivery expectations.
- Financial and Shipping Based
These types of 3PLs help optimize your entire logistics network, owned and via third parties, freight auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory.
- Software & Support
These are third party providers that assist 3pl services with software for logistic firms.
Current Challenges of 3PL
- E-commerce sales continue to boost and are a catalyst of consumer demands and catalyze new technologies that make the supply chain more relevant. Last-mile deliveries are getting more complicated as customers are now more specific about delivery demands and expect even faster shipping times. A third party logistics provider are battling every logistics problem to save time and ensure the smooth running of the supply chain.
- With last-mile deliveries, there is no single solution, and many shippers have turned to 3PL providers to fulfill last-mile requirements in ways that meet customer demands. Any third party logistics provider must work with real time using the management software to avoid outrageous shipping costs.
- Growth in the economy has contributed, in part, to increasing freight levels, and new federal regulations surrounding electronic logging devices have tightened the amount of capacity in terms of equipment and driver availability, making securing dedicated transportation space difficult for some shippers.
The Role Of Third-Party Logistics Services (3PL)
Third-Party Logistics are always present in the four parts of the supply to the sales cycle. These include procurement, transportation, distribution, and growth. The involvement of 3PL makes it easier for sellers and business owners to manage their products every step of the way. As a seller, note the following before making decisions that involve 3PL:
- Find out and understand all that the company can offer, from the rates to the customer benefits.
- Determine your business strategies, weaknesses, and strengths.
- Find out what part of the process 3PL professionals handle better.
What are the major roles offered by a Third-Party Logistics provider?
The areas of the supply to sale-cycle are essential matters for most business owners because the items shipped go through all of them. Knowing how each process works and what happens is necessary for making the right business choices.
This process covers how you get potential items to sell. You can either make them or contact a product source for wholesale transactions. A 3PL company offers the following services for sellers:
- It helps the seller develop and design a potential product.
- 3PL company aids in the determination of the best raw materials the seller can use.
- Gives suggestions regarding which factories can significantly help in item production.
- Accurate information backs proper planning and scheduling up regarding consumer demands.
- Look for a ready-made service that the business owner wants to sell.
Local and international transportation is not a big problem for most 3PL companies. The areas of expertise include all parts of the process needed to safely and securely transport a seller’s need. The three types of transportation are:
- Domestic freight
- Import or export
- Overseas shipping.
Distribution processes are the fastest-growing part of the cycle and include storage and shipping to different buyers. A 3PL company is less expensive than warehouse storage, especially for new business owners and small to medium companies. Other services include:
- Proper inventory processing and item management.
- Specific and customized packaging, as well as assembling items.
- Accurate documentation of product details in spreadsheets, emails, etc.
- Freight and parcel shipping for both B2B and B2C sales
- Great deals in item returns and refunds.
Aside from the preparation and product sourcing, a 3PL company now aids in marketing strategies. This operation may be achievable in the following steps:
- Brand logo, design, and packaging.
- Allowing connections to different market channels.
Precise & Measurable KPIs:
If you are about to engage a 3pl logistics partner define your precise and measurable KPIs
When you are going to select a 3pl partner, keep in mind that your partner has enough resources to manage or not. If yes, go ahead with that partner or make out your own plans.
Quality of Services over their Price:
It would be best if you focused on their quality of services and price. Just because their prices are attractive doesn’t mean they have the best customer service and experience. Try and find a 3PL that has great communication, customer service and great prices, with no hidden fees.
Benefits of 3PL Logistics
Third-Party Logistics Have A Lower Cost
Occupying a warehouse can be expensive because owners have to pay to maintain both the place and the employees. Third-party logistics providers don’t give customers anything to worry about, except for distribution prices. However, 3PL companies also provide many discounts and promos depending on the number and weight of the goods to ship.
There Is Better Performance And A Decrease In Delays
It is one of the best practices because third-party logistic providers can also focus on a specific area we assigned to them, so the step-by-step process becomes more prompt and improved. This strategy poses a lesser cost for the seller while making the customer happy because of the short time to deliver an item or product. When deliveries end up taking longer than usual, clients may turn to refunds, which ultimately harm the expenses and budget of the retailer.
Expenses And Costs Decrease
When business owners partner with a 3PL company, there is no need to allocate money for the electricity used, the gadgets, or the space for product storage. As long as business owners specify what they want to do with their deliveries, the 3PL industry always caters to their needs.
Business Owners Can Focus More
Sometimes, other sellers don’t know about logistics and stick to having a warehouse of their own without realizing it’s expensive. Hiring a 3PL third party logistics company to allow retailers to focus fully on their business. It also allows them to improve and expand.
What is the difference between 3PL & 4PL
3PL stands for third-party logistics. These are essentially businesses that provide single or multiple types of logistics-related services. Most companies outsource their requirements to such firms. The services offered by these firms typically comprise contract warehousing, packing and distribution services, transportation management, along with freight and inventory management.
4PL is an arrangement wherein a firm outsources the services mentioned above to a 3PL firm and hires another firm specializing in managing and coordinating the activities of the 3PL firm. A 4PL firm needs to possess an exorbitant amount of technical expertise and management capabilities. This covers several customized warehousing and distribution services. 4PL companies also handle global delivery for e-commerce at an affordable cost.
What is the difference between a 3PL fulfillment center and a 3PL distributor?
3PL Fulfillment Center
I can do order fulfillment in-house or outsourced to third-party logistics (3PL) companies.
3PL companies will handle shipping and fulfillment to customers. They provide detailed inventory management solutions, warehousing solutions, pick-and-pack services, postal logistics, and mail tracking services. This helps make your business easy to manage. All you need is to set up the store and drive traffic to it.
Distributors purchase and hold large inventory directly from manufacturers. When the demand arises, they send out large quantities or a batch to retailers. They ensure customers get their orders on time and at the right shipping costs.
3PL Order Fulfillment Process
- Inventory Handling
Inventory Handling is a systematic approach to sourcing, storing, and shipping — both raw materials (components) and finished goods (products). For an eCommerce store, it will take care of storage, fulfillment, and shipping of the products ordered by your customer.
- Warehouse Storage Solutions – Inventory Storage
The warehouse-storage providers keep track of orders and warehousing equipment like pallet racking systems and material handling. You can select your nearby warehouse to store your product. Small businesses and merchants have storage issues of products, so their warehouse storage service is beneficial.
- Order Processing
This is the process of order fulfillment where the purchased product by our customer is packed and shipped with no damage. Ecommerce businesses that work with the fulfillment services providers handle each step of order processing for you when an order is confirmed at your online store.
- Packing Order
Within the packing process, the boxing of the products to select and prepare the order for shipping.
- Shipping Order
Based on your customer shipping method and choice, the product’s shipping is taken care of by 3PL.
- Returns Managements
You will also need a system for accepting refunds, replacing goods, and refunding the customers, along with developing a dedicated returns policy.
Fulfillment centers should be able to integrate their software with your shopping carts across every channel. So it doesn’t matter if your customer came to you through Amazon, your Shopify site, or your eBay store — all stores should be integrated with your account through the fulfillment center.
Logistics plays an essential role in the business world, specifically in the demand and supply diagram. Although some sellers have their warehouses, the majority prefer 3PL providers. Finding the best 3PL provider can help to facilitate the flow of supply chains, and save you time and money. This is how 3PL Bridge can help, we will save you the stress of worrying about how your product gets to your customers and allow you to focus on serving your customers better.