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Third Party Logistics


Modern-day business operations revolve around the fulfillment of customer orders.

Ordinarily, the customer fulfillment process is straightforward but new technologies, additional requirements, delivery timeframe, and multiple storage options have made it more complicated.

And when you account for potential returns, the fulfillment order process tends to get more complicated. But once businesses start to expand and grow. It becomes difficult to deal with in-house fulfillment orders, and this is where third party logistics come into the picture.

What Makes Up 3PL?

3PL or third-party logistics refers to three parties such as the logistics provider, the shipping carrier, and the business. In layman’s terms, a 3PL provides logistical support to manage specific functions of an organization’s shopping operations.

In 2022, third-party logistics providers have become famous for their industry expertise and facilitate different types of companies to fulfill their business orders and ensure high customer satisfaction. Besides, in a competitive business landscape, it is practical to outsource specific functions of the business to a 3PL partner when your business cannot manage in-house order fulfillment.

Usually, 3PL becomes part of an organization’s transportation process and inventory storage system. In layman’s terms, once companies hire the services of a third-party logistics provider, the company does not have to package, store, and ship orders on its own.

Many entities also use dedicated 3PL software solutions to streamline their order fulfillment process. Whether it’s startup firms or fortune 500 companies, hiring 3PL providers has become a new standard. Once the company starts to depend on 3PL to manage various processes. 3PL leases or owns transportation and storage assets through order fulfillment. In short, 3PL manage complex order fulfillment so that companies can put their time, effort, and resources into other business activities.

Don't Confuse 3PL with 4PL

Whether it’s 3PL or 4PL, both are hired services that allow businesses to manage the order fulfillment logistics. And both services allow businesses to achieve more flexibility in managing the in-house fulfillment process. 4PL provider throws in another factor to optimize the overall supply chain process and execution.

When it comes to managing daily order fulfillment of customers, it is more than enough for businesses to depend on their third-party logistics provider. However, 4PL serves as a control tower that monitors the entire supply chain management.

You can view 4PL in the capacity of supervision on top of the 3PL provider. The idea is to utilize the most efficient use of resources and technologies and make sure your supply chain process. At its core, third-party logistics focus on assets, whereas, 4PL providers focus on optimization and integration of supply chain processes.

What Services You Can Expect
from Third Party Logistics Providers?

You can count on third party logistics to provide personalized and scalable services that cater to your specific needs. When it comes to 3PL service businesses some level of oversight to manage shipping operations. If you plan to expand business operations, you can count on your 3PL provider to assume a bigger role with more added services. Here are some of the services you can expect from a third-party logistics provider.

Warehouse Storage

One of the essential services you can get from a 3PL provider is warehouse storage space for your entire inventory. Most third-party logistics provide a shared warehouse storage service that makes it easier to manage order fulfillment of various clients from a single physical location. This approach also allows companies to cut down costs and boost operational efficiency.

Freight Forwarding

On top of picking and packing the inventory, 3PL providers also ensure fast delivery to the shipping carrier. However, different third-party logistics providers collaborate with different carriers. The most reliable 3PLs offer a combination of fast delivery and competitive pricing. On the other hand, some 3PLs partner with local carriers to ship local orders more efficiently.

Inventory Management

This type of service involves storing the company’s products as well as integrating specific technology to sync inventory in real-time. This rapid and real-time inventory management allows online stores to predict demand and track inventory to avoid sell-outs.

Inventory Distribution

Most 3PL providers are capable of managing various warehouse locations that make it easier to manage and distribute inventory across different fulfillment centers and ensure fast shipment throughout the country. But when it comes to inventory distribution, 3PL needs robust technology to automate the entire fulfillment process and route orders to specific fulfillment centers. Fortunately, most third-party logistics providers use automation to ensure inventory distribution is highly profitable for businesses.

Picking & Packing

One of the standard services 3PL Providers offer is picking and packing the company’s inventory. In fact, third-party logistics providers have trained staff to perform these tasks that involve order fulfillment. From picking up the products of each order to packaging products for shipping, you can count on the 3PL providers for picking and packing.

Reverse Logistics

Reverse Logistics is one of the most sought-after services offered by 3PL providers. Technically, a third-party logistics provider offers customers unique return labels so that it can deliver the item to a carrier for a specific return. Most businesses customize their reverse logistics service before signing contracts with your 3PL provider.

Shipment Tracking

When it comes to 3PLs, you have to think about more than just handling your shipping process. In fact, the modern-day third-party logistics providers track and trace specific orders throughout the fulfillment process.

Expedited Shipping

One of the services you can avail from a 3PL is to get expedited shipping. Extended expedited shipping makes it easier to manage in-house fulfillment centers. Most third-party logistics now offer discounts and even negotiate with carriers to ensure faster delivery without any added cost. Typically, 3PLs negotiate with major carriers like DHL, USPS, and FedEx.

Data Review

If you’ve managed to cross the threshold of nine-figure annual revenue, then you can bring in a third-party logistics provider on board to optimize your operations and review current market trends. You can count on many 3PLs to get freight auditing, bookkeeping, cost accounting, inventory management, and tracking and tracing services.

Process of 3PLs Order Fulfillment

Perspective matters when it comes to your order fulfillment process. It all starts with receiving and moving the inventory to the warehouse. After that, your 3PL provider will pick up and fulfill the placed orders by the customers.

Remember that this process involves the use of integrative technologies. After an order is picked, 2PL packages the item for the shipping process. After packing, the order gets packaged and picked and is passed on to a specific shipping carrier. Last but not least, the 3PL provider makes sure returns are directed for restocking or disposal as per the company’s policy.

Benefits to Opt for 3PL provider for Your Business

Save Money and Time

One of the advantages of availing the services of a third party logistics provider is that it saves valuable resources and time for your business. In fact, 3PL entities are designed to mitigate the burden of distribution and warehousing responsibilities for companies.

Since 3PL providers share the distribution and warehousing of businesses, companies get the chance to simplify their supply chain process and minimize costs. Besides, no company has enough time or money to set up its own distribution and warehouse. Through a 3PL provider, businesses can streamline and scale up the entire process on specific terms and conditions.

Proper Utilization of Resources

Many businesses consider opting for a 3PL provider as a significant investment. But companies must consider outsourcing a 3PL as an opportunity to create a robust and resourceful network. Whether it is distribution partners, warehouse suppliers, or transportation assets, you can count on a 3PL provider for most supply chain and logistics services. The most reliable 3PLs have an extensive network that works in favor of companies to optimize their supply chain and logistics.

Expansion Opportunities

One of the perks of seeking out the services of a 3PL provider is getting more opportunities to expand business operations. Most businesses have a predetermined growth trajectory that depends on internal and external factors. But when businesses outsource their entire order fulfillment process to a 3PL provider, it allows businesses to generate more revenue and boost profit margins. And that’s because 3PL providers create direct distribution into specific regions to ensure delivery.

Optimize Inventory Distribution

One of the main reasons companies avail the services of a 3PL provider is to optimize their inventory distribution. A third-party logistics provider allows businesses to manufacture and deliver more high-quality goods to customers.

Continuous optimization is one of the hallmark qualities of a 3PL provider that improves the distribution chains and processes of the companies. In fact, a 3PL provider makes constant changes and improves its offerings to ensure businesses can depend on their efficient, streamlined, and safe delivery services.

Achieve More Flexibility

At some point, businesses hit their slow or peak point. But the last thing businesses need is an expensive storage warehouse to maintain inventory operations and cater to the specific needs of the clients. By partnering with a third-party logistics provider, the company can accelerate its entire order fulfillment process and scale-up eCommerce operations. 3PL creates heightened flexibility for companies to meet changing business needs.

How to Choose the Best 3PL Provider

Once you’re ready to hire a 3PL provider, your next course of action

should be focused on specific considerations. The sooner you avail
the services of a 3PL provider, the faster you can expand and grow

in a competitive marketplace.

Terms and Conditions

Review the terms and conditions and track record of the 3PL to get the most satisfaction from its services.

Enforceable NDA

Find out whether or not the 3PL provider would sign an enforceable NDA.

Check out 3PL Warehouse

Visit a distribution center or 3PL warehouse to find out whether or not their operations align with your standards.

Total Warehouses

Find out the number of warehouses the 3PL operates in different locations.

Offered Services

Find out the services a 3PL provider offers and determine whether or not those services cater to your needs. You should also feel free to ask a 3PL provider about their specialized services.

Operating Hours

You should also consider the operational hours during holidays and weekends of a 3PL provider before hiring.

Value Proposition

Ask how the 3PL provider you want to hire stands out from other 3PL providers in the market and how it can bring value to your business.

Used Software Programs

Learn more information about software solutions 3PL uses for its clients.


Ask around and evaluate whether or not the 3PL provider has a wider network than others and how it negotiates rates with the carriers.

Custom and Scalable Services

Find out whether or not the 2PL provider offers scalable and personalized services.

Check Reviews and Testimonials

Review the customer profiles and level of customer satisfaction of previous clients of the 3PL provider. In fact, take a closer look at past reviews and testimonials of the 3PL provider.

Expedited Shipping Options

Find out the expedited shipping options and deliverable guarantees the 3PL provider offers to its clients.

Final Thoughts

Ideally, you should take your time and choose a third party logistics provider that offers services that align with your business. And make sure the 3PL provider you choose signs an NDA that protects your firm. You will have to do more than just communicate with the official representatives of a 3PL provider.

Instead, be direct and ask for industry references and then decide whether or not the 3PL provider holds up to the market reputation and track record. In most cases, choosing the “right” 3PL provider is a game-changing decision. Opt for a 3PL provider that can serve in the best interests of your company and streamlines your order fulfillment process.

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