An Ultimate Guide to Third-Party Logistics (3PL)

Third-party logistics (3PL) plays a crucial role in supply chain management, offering a range of benefits to businesses of all sizes and industries. In today’s fast-paced and ever-changing business environment, managing the logistics of goods and services can be a complex and time-consuming task. However, with the help of a 3PL service providers, companies can streamline their supply chain operations, reduce costs and improve overall efficiency and customer satisfaction.

This article will explore the key features and benefits of 3PL companies and provide an ultimate guide to third-party logistics.

What is a 3PL company?

Third-Party logistics service providers (3PL service providers) are companies that manage a business’s all type of logistics needs including transportation, warehousing, order fulfillment, inventory management and customer service. The key benefit of using a 3PL company is that it allows businesses to outsource their logistics operations to a single provider, freeing up time and resources that can be used to focus on other core business functions. 3PL companies also provide a high level of expertise and experience in logistics operations, helping businesses to improve their overall supply chain efficiency.

What services does a 3PL Provider?

A 3PL can provide customized services according to the clients’ specific needs. Below is an overview of services a 3PL typically provides:

Product Storage Solutions

3PL companies provide storage solutions in their multi-client warehouses to their clients to handle order fulfillment. 3PL Companies offer the storage space for the business’s products, meeting their specific requirements related to temperature, humidity, racking and space allocation. Further, special approvals such as bonded license, freeport license and other compliance certifications are obtained to cater to specific customer and cargo requirements.

Warehouse Management/Inventory Management Services

3PL companies manage their clients’ inventory levels, including monitoring stock levels, controlling the flow of goods, and ensuring that the products are properly stored and managed. 3PL companies extend their systems, technology and resources to manage inventory in real-time and provide businesses with real-time data for better inventory and warehouse space management.

Order Fulfillment/Distribution Services

3PL companies receive orders from both retail and e-commerce customers, picking and packing goods after performing required value additions and arranging orders to be completed and sent out regularly. 3PL companies also manage the end-to-end distribution and last mile delivery services for the end customers of their clients.

Value Added Services (VAS)

3PL service providers also offer a wide range of value additions that go beyond traditional storage and distribution of goods. Some common examples of VAS provided by 3PL companies include, but not limited to, sticker pasting, labelling, pick and pack operations, promotional bundling, etc.

Freight Forwarding & Clearance Services

3PL companies that offer freight forwarding services, act as control towers between the client and various transportation services, coordinating the entire process and ensuring that goods are shipped from one place to another in an efficient and cost-effective manner. 3PLs also offer clearance services, including obtaining necessary licenses and permits, paying tariffs and taxes, and complying with regulations and standards.

Reverse Logistics

3PLs also manage the supply chain process of returning products from end customers back to retailers and manufacturers (which is called “reverse logistics”). Reverse logistics process includes planning, implementing and controlling the efficient and cost-effective flow of reversed goods.

Benefits of third-party logistics.

Optimized space utilization & cost savings

Outsourcing logistics operations to 3PL companies can help businesses reduce their costs by eliminating the need to invest in equipment, facilities, staff and technology to manage these functions in-house. In addition, 3PL companies constantly optimizing their space utilization also results in significant cost savings for clients.

Improved efficiency via technological advancements and automation

3PL companies investing in technology and autonomation projects can help improve the efficiency of their client’s logistics system by providing advanced logistics services, reducing lead times, providing real-time visibility, thereby improving the overall efficiency and customer experience.

Scalability with demand

3PL companies support businesses with scalability in the face of business growth and dealing with demand fluctuations, which eliminates the need for companies to hold buffer space and resources. In addition, it allows businesses to quickly scale their operations up or down as needed, without having to invest in additional resources and focus on other core areas of their business.

Focus on core competencies

Supply chain/logistics management is a tedious process requiring close follow-ups and monitoring. It requires a significant commitment, in terms of time, resources and is non-value adding for manufacturing and trading companies’ key operations. When companies outsource it to 3PL companies, they can focus better on their core business.

Mitigate risk and provide consistency

There can be unexpected situations and delays affecting supply chain, as we have recently experienced a global supply chain disruption due to the adverse effects caused by COVID-19. When these sort of issues arise, 3PL service providers can take the responsibility for finding alternatives and solutions thus taking the additional burden off the businesses.

EFL 3PL offers comprehensive third-party logistics services, including multiple storage options such as temperature-controlled facilities, freeport warehouses, custom bonded warehouses and cold storage facilities, as well as order fulfillment, distribution center management, distribution, e-commerce support, clearance services and a range of value-added services. To learn more, visit www.efl3pl.lk