Introduction 

At a pivotal juncture in your business journey, entrusting your logistics operations to a third-party provider becomes essential. By doing so, your company can concentrate on its core strengths while offloading tasks such as freight transportation, storage, and distribution to an external partner. 

But how do you determine if this shift will benefit your firm’s expansion? Explore the key factors to consider and pinpoint the optimal timing for using 3PL logistics for your business strategy. 

What is 3PL logistics?

A 3PL (Third-Party Logistics) system in logistics refers to outsourcing your company’s logistics services to an external provider. This provider specializes in logistics services that offer customized solutions for managing your company’s supply chain. The 3PL system lets your company focus on its core business while the logistics provider manages its supply chain processes.

Some Examples of 3PL Logistics 

1. Warehousing and distribution of electronic products

A company that manufactures electronic devices hires a logistics service provider to manage its warehouses, control inventory, and coordinate the distribution of its products to retail stores and online customers.

2. Cargo transportation management

A company that imports perishable foods from abroad hires a 3PL logistics operator to manage its products’ sea, air, or land transportation, customs clearance, and compliance with relevant regulations.

3. Cross-docking

A fashion company outsources logistics to a 3PL provider, which receives products directly from the manufacturer, sorts them, and redistributes them to retail stores, eliminating the need for long-term storage.

4. Packaging and labelling service

A cosmetics company hires a 3PL provider to package, label, and prepare its products for shipment to stores and end customers.

5. Reverse logistics

A consumer electronics company outsources the management of returns and guarantees of its products to a 3PL provider. The provider is responsible for receiving the items, evaluating their condition, and carrying out the necessary actions, such as repair, recycling, or refund.

6. E-Commerce Shipping Management

An online store hires a 3PL provider to handle warehousing, order fulfilment, packaging, and shipping of its products to customers.

What Does A 3PL Do?

The functions performed by a 3PL logistics operator may include:

• Transportation of goods and delivery of products to the end customer.
• Inventory management and quality control.
• Storage and preparation of orders.
• Planning and optimisation of delivery routes.
• Customs services and procedure management.
• Advice and consulting on logistics and supply chain issues.

Differences Between A 3PL Company And Other Logistics Service Providers 

There are different logistics service providers, each of which is distinguished by the degree of outsourcing of their logistics services. Knowing their differences will enable you to choose a good logistics service provider. 

• 1PL Company

In this case, the company is responsible for managing its supply chain; that is, it handles the logistics processes internally.

• 2PL Company 

This logistics provider offers specific services, such as transportation or storage, but the company is still responsible for managing its supply chain.

• 3PL Company 

This logistics service provider offers personalised solutions for the complete management of the company’s supply chain, which allows outsourcing these processes.

• 4PL Company

This logistics service provider will manage the entire supply chain, including coordinating services offered by 3PL providers.

• 5PL Company

This logistics services provider focuses on the strategic management of the supply chain, offering consulting and advisory services to optimise processes.

How Do 3PL Logistics Services Work?

3PL Logistics Services offers a wide range of customised services for completely managing your company’s supply chain. Some of the most common services offered by 3PL logistics providers include:

1. Transportation services

This includes freight transportation, courier services, refrigerated products, and transportation of dangerous cargo, among others.

2. Warehousing and inventory management

This includes warehousing, inventory management, order picking, and distribution services.

3. Customs services 

Customs clearance services include tariff classification, consulting, and advice on international trade issues.

4. Consulting services 

This service consists of consulting and advisory services in supply chain optimisation and strategic planning.

What Does A 3PL Logistics Company Require From You?

For 3PL logistics for your business to work efficiently, your company’s collaboration and commitment are required. Some important aspects to keep in mind are:

• Clear and fluid communication between your company and the 3PL logistics provider.
• Providing accurate information about products and demand for better planning of logistics processes.
• Flexibility to adapt to changes in demand and the market will allow effective supply chain management.
• Collaboration in implementing technologies and tracking and monitoring systems for greater efficiency in logistics processes.

Should You Use 3PL Logistics For Your Business?

To answer this question, consider the advantages of hiring a Third-party logistic provider for your business:

1. Complete focus on your core business

Outsourcing logistics processes allows your company to focus on its core business and improve efficiency in its operations.

2. Flexibility

A 3PL logistics service provider can adapt to changing market demands, allowing more effective supply chain management.

3. Cost reduction

Using a logistics service provider can help reduce operational costs by avoiding investing in infrastructure and resources for supply chain management.

4. Seasonal Fluctuations

Many businesses experience seasonal spikes in demand, which can be challenging to manage with in-house resources. Using a 3PL provider during peak seasons allows you to handle increased order volumes without the long-term commitment of expanding your facilities or workforce.

5. Cost Management

A significant advantage of using 3PL logistics for your business is the potential to lower overhead costs. Instead of investing in warehouse space, technology, staff, and equipment, you can leverage the resources of a 3PL provider. This is especially beneficial for your company if you want to avoid the fixed costs of maintaining a shipping and warehousing infrastructure.

6. Streamlining Operations

3PL providers often have sophisticated technology and systems that can streamline your logistics operations. If your business wants to improve efficiency and reduce time spent on logistical tasks, a 3PL can offer advanced software solutions and a skilled workforce to manage your shipping schedule effectively.

7. Entering New Markets

Shipping logistics can become complex when expanding into new geographic markets. A 3PL with a global presence can help you navigate the challenges of international shipping regulations, customs, and local delivery networks, making your expansion smoother and more cost-effective.

Final thoughts 

Third-party logistics (3PL) has become an essential tool for your organisation to improve efficiency in managing its supply chain. Outsourcing logistics services to a 3PL service provider can offer significant advantages in terms of cost reduction, access to expertise and technology, flexibility, and focus on the core business. 

When choosing a 3PL logistics for your business, it is important to consider factors such as experience, technology, flexibility, and geographic coverage to ensure the provider can meet the needs of the business. 

Kel Logistics will assist you if you are looking for a reliable logistics firm to manage your operations. We want to relieve the burden of your logistics so you can focus more on your business. To learn more about our logistics services, visit the contact section immediately.