3PL or third-party logistics (also called TPL) is often used to outsource distribution and fulfillment services of a business. Several decades ago, there were pretty much only two parties involved; the shipping carrier and the retailer.
Slowly, third-party logistics providers started to become a big player as well. They are not owners of the inventory but are obligated to perform their duties. Since the advent of the Internet, this industry has become huge. Some of the biggest companies on the planet use third-party logistics now. Let’s take a more in-depth look at this now.
1. When To Get A 3PL Partner
Perhaps your business does not need a 3PL partner. If it is a really small business and you just need to fulfill 2 or 3 orders a day, then you probably don’t need one for the moment unless things pick up. However, if you are having to fulfill about 20 or more orders per day, then you may want to look into getting a partner very seriously.
Even then, your profit margin from product sales should be able to support you enough to make this a wise decision. An innovative 3PL partner can make a big difference when they handle this workload for you.
2. Types Of 3PL
There are various types of 3PL providers who cover various things such as transportation, distribution, shipping and receiving and warehousing. Some of the smaller companies may focus or specialize in just one thing. The bigger ones are capable of doing everything. Of those mentioned, the most common ones are arguably those that deal with warehousing and distribution. These can handle things such as shipment, returns and storage.
When you partner with a 3PL company, you can enjoy several advantages. For example, you will be working with a professional outfit. They are more than capable when it comes to shipping, warehousing and fulfillment. You can set up your own, however, as many companies have found out to their detriment, it is not so easy or effective.
Growing and managing internationally can be difficult without the services of a 3PL company. They will handle all the necessary documentation, duties, customs and any other relevant matters when it comes to international shipping, leaving you to concentrate on your business.
You can also limit your overheads. Imagine if you had to set up your own warehouse, lease the space and hire a fulfillment team. This will be incredibly costly and would make no financial sense since it will eat into your profits. At the end of the day, without careful thought, you could be losing money if you were to undertake something of this magnitude.
4. Choosing A Partner
Choosing the right 3PL partner is a big decision that needs to be spot on. Otherwise, it would cause major problems with customer service, company logistics and repeat customers. You also need to share sensitive information with a third party. Security could be a major issue. This is a decision you must get right, so tread carefully and do your research before you join hands with someone.
Partnering with a 3PL company can take your business to the next level. It can help you to grow your business and leave the other things in the hands of a top 3PL firm.