What is 3PL: Know About Its Benefits & Practical Tips
Logistics is the process of efficiently transporting and storing things from their point of origin to their location of consumption. The purpose of logistics is to meet the needs of customers in a timely and cost-effective manner. Initially, logistics was critical in transferring military people, equipment, and products. While logistics is as vital in the military as it has always been, the term is now more generally used in the context of transporting commercial commodities within the supply chain.
The typical business strategy of performing many or all processes in-house isn't necessarily the most efficient. This is especially true for tiny eCommerce companies. Numerous eCommerce businesses have been able to grow while operating on a low budget. Third-party logistics services enable you to collaborate with industry experts on one of the most critical areas of your eCommerce business. This frees you up to concentrate on marketing, expansion, and client happiness.
What is 3PL? What are the different types of services?
Third-party logistics, or3PL, is synonymous with fulfillment warehouse and fulfillment center. Several of the same services are provided by 3PL firms as order fulfillment organizations. Among these services are:
● Inventory control
● FTL and LTL freight
● shipment and receiving
● Choosing and packing
● Customization and kitting
An eCommerce fulfillment firm is provided by a third-party logistics company. It offers everything you need to outsource your logistics operations. Third-party logistics, as defined above, is abbreviated as 3PL. Third-party logistics is frequently used interchangeably with order fulfillment. A third-party warehouse offers a comprehensive variety of eCommerce fulfillment services. Warehousing, order processing, and shipping and receiving are all examples of this.
Many 3PL warehouses offer additional services. Customer service returns processing and personalization are examples of such services. The most prevalent sort of outsourced logistics company is the 3PL business model. Other versions, such as 4PL and 5PL, exist, but by far, the
majority of companies, large and small, are interested in 3PL.
How is logistics relevant in different industries?
These days, when the issue of "supply chain disruption" dominates the news headlines, logistics has risen to prominence like never before. This is since logistics is the business, art, engineering, and science of moving goods about our world. In other words, everything you own and everything you buy on any given day must "get there" in some manner.
It includes trucks, ships, trains, and planes for transportation, warehouses for storing goods, loading, and unloading equipment, and even humans to conduct simple tasks like stocking stores.
If we take the example of Flipkart, every day, Flipkart sends out a million parcels across the country. The extensive technology infrastructure in place at Walmart's online marketplace assures flawless delivery. Robots are pushing their efficiency to the next level. Flipkart has installed robots, or automated guided vehicles(AGVs), at its Bangalore shipment sorting center. With minimum human assistance, these rectangular objects move on their own and place items in predetermined spaces.
The deployment of these robots is just one example of how Flipkart has constantly built a digital infrastructure for its entire supply chain network over the last decade, with the primary purpose of meeting the expectations of its customers. EKART, Flipkart's logistics and delivery business, has been doing this for over a decade.
The supply chain network is a complicated phenomenon that involves numerous nodes such as fulfillment centers, sorting facilities, delivery hubs, and last-mile delivery of items. All these pieces must work together to ensure that the correct goods are delivered to the correct address.
How is 3PL beneficial?
It could be to increase client base, enter new markets, or generate great consumer experiences, but more and more firms, both large and small, are seeking external support and expertise to run their supply chain more efficiently and achieve a competitive advantage. This is where a third-party logistics (3PL, also known as TPL) supplier may help.
1. Increase Cost Savings
Third-party logistics companies specialize in logistics and, as a result, have a larger network than your company's supply chain function. They have unique ties in the logistics business and can wield more clout during negotiations. They can also assist in offering larger volume discounts to clients. All of this can help to reduce overhead expenditures.
You can also save money on infrastructure by working with a 3PL supply chain management service, which can provide transportation, warehouse space, people, and tracking technology, among other things.
2. Get Knowledge and Experience
It is difficult to anticipate and accommodate internal expertise in all capacities and regions required in today's complex global market landscape. A 3PL service provider, for example, is knowledgeable and experienced in areas like transportation documentation, import and export, international compliance, and economic rules.
Companies wishing to grow into foreign markets can benefit from their partner's logistics expertise and know-how, avoiding costly delays, shortening the cycle time, and making entry into a new region easier.
3. Concentrate on Core Competencies
Outsourcing logistics will allow your firm to concentrate on its core strengths rather than managing non-core yet vital functions. Without employing internal resources, your company can reap the benefits of logistical experience.
4. Increase your flexibility and scalability
Another advantage of third-party logistics in supply chain management is that it allows businesses to use supply and distribution resources based on actual business demands. When sales are weak, there are no redundant investments or unutilized resources, and when demand increases, firms can scale up.
5. Allow for business expansion and market expansion
Third-party logistics' purpose in supply chain management is to support business expansion by providing organizations with access to markets where they do not have a strong presence. Being able to manage inventory in a new market without spending money on warehouses, equipment, and people can save money, as well as the time spent learning the logistical peculiarities of a new market.
6. Enhance Customer Satisfaction
All the 3PL advantages mentioned above will result in enhanced services and response times, on-time delivery, and increased brand reliability. This translates to happy clients, which is the goal of all organizations.
3PL key examples: The major functionalities
3PLs can engage carriers, consolidate less than container load (LCL) or less than truckload (LTL)freight, track freight payment and insurance paperwork, and cooperate with private fleets when it comes to transportation.
Partnering with a 3PL can also assist you in lowering transportation costs, increasing efficiencies, and developing solutions for complicated supply chain difficulties. Third-party logistics companies are frequently able to provide real-time visibility to your inventory as it is in motion due to connectivity to various stages of supply chain operations.
2. International shipping
Global shipping can be complicated and stressful for enterprises. A 3PL can handle worldwide shipping logistical requirements such as customs, freight forwarding, and consolidation, freeing up your time and money for other tasks.
Who are the top 3PL logistics companies?
Here, we will look at the best organizations that provide 3PL logistics or order fulfillment services to eCommerce businesses.
Shadowfax is the world's largest on-demand tech-backed gig marketplace, assisting businesses in outsourcing last-mile activities. Shadowfax uses machine learning and artificial intelligence to provide supply that keeps up with demand in the fast-growing and highly fragmented hyperlocal distribution ecosystem, ensuring a fantastic end-user experience.
It is one of the world's largest logistics corporations. This company fulfills orders for eCommerce businesses with high order volumes. While FedEx has a big shipping network, it also has agreements with a variety of businesses to provide a seamless fulfillment experience. The FedEx API integrates with online selling platforms such as Shopify and marketplaces such as Etsy and Walmart.
3. The Red Stag
Red Stag is a third-party logistics company based in Tennessee. This company, which was established in 2013, specializes in the fulfillment of heavy items and products that require assembly prior to dispatch. With two warehouse facilities in the central region, this company serves the entire continental United States.
Choosing a third-party logistics firm is likely to be one of the most vital decisions you'll make as your e-commerce business grows. You're putting your faith in the provider you've chosen to look after your brand and give the client experience you want. Your company's logistics, customer service, and repeat purchase rate can all be made or broken by the appropriate partner. It is a major risk to entrust someone with sales, inventory, and other sensitive information.
What factors are responsible for the success of a 3PL?
A good 3PL, like ShadowFax will contact you with questions and suggestions to assist you in improving your operations and delivering better service to your consumers. They're also good at problem-solving and coming up with novel solutions. To achieve peak performance, they may reengineer procedures or implement best practices.
What factors should I look for in a 3PL?
There are ten elements to consider when selecting the right 3PL for your organization, regardless of your sector, market, or location.
Security and safety.