To help you visualize what this entails, here is a description of the order fulfillment process from the perspective of a third-party logistics firm:
Step 1: Receiving
If a 3PL can’t fulfill customer demands because it doesn’t have anything to supply, then you must move your products to the 3PL’s facility. Depending on the size of your company, your inventory may be handled by several fulfillment centers, allowing orders to be fulfilled more quickly and effectively. Each 3PL has its own method for acquiring and storing goods.
Step 2: Picking
After a client places an order, the 3PL follows with “picking” of the item by beginning to fill it. This information may be automatically transmitted to the 3PL or you may have to manually input orders into their system, depending on the type of interdisciplinary technology they provide. When the order is received, the 3PL’s picking team collects the item and passes it on to the next stage of the supply chain for packaging.
Step 3: Packing
All of the items in an order are packed for shipment once they have all been selected.
Depending on the customization options your 3PL provides, you may be able to choose the packaging for your orders. Standard packing materials usually include unbranded boxes, bubble mailers, poly bags, packing tape, and bubble wrap. Some 3PLs charge for packing materials, while others include them in their fulfillment services. A good 3PL will select the finest supplies to preserve the item while still keeping delivery costs as low as feasible.
Step 4: Shipping
After the purchase is made and packed, it is sent to a shipping service.
Some 3PLs have a favorite shipping carrier, while others compare prices to determine the best combination of price and delivery speed. In most situations, carriers collect goods from the 3PL’s warehouse.
Step 5: Returns
Not all transactions come to a close when the goods arrive at the consumer’s door. Returns are a major problem for many businesses, and if you’re handling a big stock of inventory on your own, they can get messy. When you delegate this aspect of the supply chain to a 3PL firm, all returns are returned to the 3PL and processed, restocked, or disposed of in line with your company’s policy. You may also have your 3PL firm print shipping labels for your clients to make the procedure easier and allow them to track the status of their return.
The advantages of a third-party logistics partnership should be self-evident by now, but how can you tell if yours is suitable for such a relationship? Continue reading to learn the indicators that your firm might benefit from a 3PL.
When Do You Need a 3PL?
If you run a modest retail company out of your garage with no more than a dozen orders each week, chances are excellent that hiring a third-party logistics provider would be beneficial to your business. Here’s a rundown of the advantages that working with a third-party logistics provider may provide you:
- You’ll have more time to focus on what’s essential: growing and expanding your business.
- It may save you money: a 3PL can combine warehousing, shipping, and inventory management into one package for one price, and it might be less expensive than doing everything in-house.
- It relieves you of the burden; it shifts the responsibility to someone else. It might be nerve-wracking to entrust your company’s logistics to someone else, but it implies that another person will be held responsible.
- It allows your company to keep up with technological and regulatory changes: a competent 3PL keeps up with the most recent technology and industry standards, so you don’t have to.
- They will be packed correctly and swiftly: to provide the greatest services at the best value, a 3PL must be able to satisfy clients quickly and efficiently. That value is then passed on to you.
- It may be adjusted to meet your specific needs: A 3PL company can tailor its services to your preferences and adapt as you develop.
- Hiring a 3PL allows you to access to greater resources: Hiring a 3PL enables you to use the best inventory management software and other integrative technology that you may not be able to obtain on your own.
- S3PLs expand your market reach: A 3PL firm has a network of partners, including shipping carriers and other service providers, to ensure that you receive the finest services at the lowest possible rates.
- Outsourcing your company’s operational logistics may help you avoid individual and business risks. You won’t have to worry about labor risks or the financial risk of purchasing equipment and storage space if you outsource your firm’s operational logistics.
If you’re still unsure whether to hire a 3PL company, here are some of the most common indicators that your company may benefit from outsourcing logistics:
You’re shipping more than 100 orders per month
There’s nothing mystical about the number “100.” The goal is that your firm is receiving more orders than you can handle in-house as your business expands. When you spend more time and energy fulfilling orders than focusing on your business, it’s clear that you need to hire a 3PL.
Your inventory is running out of space. The objective of any retail firm is to have enough orders so that increasing your stock becomes a necessity. Of course, when this happens, you’ll need extra storage for all of that extra product. Rather than having to deal with this issue every time you add a new product to your store, outsource storage operations to a 3PL.
You want to offer your customers expedited shipping
Assume you’re currently handling your order fulfillment internally. You may be having trouble making it to the post office even once per day, much less frequently than that, in which case providing expedited shipping choices to your clients may be difficult. You might be able to provide one-day, two-day, and even same-day delivery if you use a 3PL to handle your order fulfillment logistics.
You want to save money on storage and shipping
Hiring a 3PL service is not cheap, but it may save you time and money if done correctly. If you’re unsure whether it’s worth spending the money to lease warehouse space, consider hiring a 3PL and using that cash to grow your business instead. As a key component of the client experience, 3PL service providers’ fast delivery speeds can be a competitive edge.
You want your company to have room to grow
Forward-thinking is a primary trait of any successful businessperson. From the moment you start your company, you should have a clear vision for where you want to go and how you intend to get there. A 3PL can assist you in expanding your product offering across the country or around the world by providing inventory distribution services. Some 3PLs, for example, may allow you to take advantage of 2-day or overnight shipping to help online retailers keep up with Amazon and other behemoths.
Hiring a 3PL provider to handle your supply chain’s logistics is a smart choice if any, or all, of the above indicators appear. Before you start looking for a 3PL, however, you should think about whether it’s sufficient. You might wish to consider outsourcing logistics even further by hiring a fourth-party logistics provider; keep reading to learn more.