The Definition of Third-Party Logistics
The definition of third-party logistics tends to be somewhat confusing for many business owners worldwide. Basically, it is a service that helps you outsource different aspects of logistics as well as the whole supply chain. The 3pl companies offer all kinds of services such as transportation, warehousing, and packing, to mention just some. It’s essential to note that a third-party logistics company can be a single provider or a system of various providers that are involved somehow in the supply chain management. Expanding business leads to an increased number of orders, and to fulfill these orders promptly, we might need some professional help, when it is no longer feasible for us to do so on our own. That’s why it’s quintessential to understand the term and to know when the time is for hiring such a company. Read on to learn more about the 3pl and whether it’s right for you.
1. A brief definition
Third-party logistics is a key component of modern e-commerce trading. Businesses reach out for these kinds of services when their business is in expansion and needs help when it comes to fulfilling orders. That means that when you are no longer able to fulfill your daily orders without engaging your family and friends, staying late at night packing and preparing them for shipping, a 3pl service would help you. Look at this as an investment into your business, as in this way you will be able to focus more on improving and expanding your business. If you hire a 3pl service, you would just take orders and they would do the rest, leaving you with plenty of time to spend on brainstorming and upgrading your business scope. Depending on your business needs, many 3pl companies offer different forms of collaboration in the fields you need the most.
2. Who needs 3pl services
It’s important to note that we shouldn’t wait to be overwhelmed by orders to start searching for a suitable 3pl company. Also, by being swamped with fulfilling orders, we are unable to commit to business growth. If we break order promises, we are risking our brand name and reliability, which could have detrimental effects over time. In order to decide whether you are in need of 3pl services, you should consider a few things. Let’s start with the number of orders per day. Calculate the number of orders you have now and try to predict the potential number by using 3pl services. It’s important to find a balance between profit and expenses. Next on the list is storage space. Take into account the cost of storage space or the lack of space if you’re using your private property for such purposes and compare it to the cost of using a 3pl. Perhaps it pays off more to hire such a company that will handle storage. Thinking a bit ahead, consider the potential rise in demand and calculate whether you’re able to handle it on your own. Questions like these might help you in deciding whether to opt for a 3pl outsourcing company. Another thing to take into consideration is the digitalization and automation of this process, forced largely by the ongoing COVID-19 pandemic. If you realize that you do need the help of a 3pl, opt for such a company that can handle the supply chain even in pandemic conditions.
3. Mind the different 3pl services
When doing your research on the 3pl companies and the services they offer, you should pay attention to whether they provide full-service, warehousing options, transportation, distribution of items as well as shipping. Some 3pl companies specialize in all these aspects while some specialize in just one or two. That’s why it’s crucial to do thorough research and find a company that can fulfill your business needs.
4. Advantages of using 3pl
The coronavirus pandemic has forced us to make some changes in the way we do business. One of these crucial changes in the automation of warehousing enables us to save precious time we used to spend filling out tedious documentation. It is an aspect which is of key importance nowadays. As 3pls specializes in order fulfillment, storing and shipping, you can be sure that they will do a professional job regarding your business. It also aids you in expanding internationally. International orders need to go through specific processes such as customs, duties and special documentation. It aims to improve your customer’s satisfaction, to reduce shipping costs as well as time – key things for customers. Moreover, it can limit overhead expenses in the long run.
5. How to choose the right 3pl provider
Choosing the right 3pl is not an easy thing to do as you need to entrust them to deliver your company’s vision to your customers, take care of your brand and remain solvent. Essentially, a 3pl can make or break your logistics. Start with finding out some basics about the company and their stability, check their working hours during holidays and the types of agreements/contracts they offer. Make sure that they can fulfill the volume of your orders. Take into consideration the platforms they use and the communication they offer for returns, notices, inventory counts and so on. Moreover, get familiar with all the costs for services they offer.
Even though using the services of a 3pl logistics company can be costly, if your business is in expansion, you should look at it as an investment that will help you in expanding your business. It is an investment that will pay off in time.