The Ultimate Guide to Third-Party Logistics (3PLs) and How They Handle Order Fulfillment

Customer orders make up a significant portion of a company’s daily operations. When a client places an order, the process begins and ends when the product arrives at their home.

When you’re a small business, it’s important to keep track of your inventory. Keeping inventory in warehouses or depots can be expensive and requires a large amount of maintenance. When it comes to managing inventory, there are several variables that may cause the procedure to become complicated. When you include the prospect of returns, things get even more perplexing.

When a firm’s order fulfillment capacity outstrips its own, it may be time to look into outsourcing some activities to third-party logistics businesses (also known as 3PL services).

Continue reading to discover everything there is to know about 3PLs.

What is a 3PL? 

The business, the logistics provider, and the shipping carrier are all involved in third-party logistics. A third-party logistics provider is a company that manages certain components of a firm’s shipping operations via logistics services. 3PLs are renowned for their experience in the freight industry and can assist firms in delivering orders to keep consumers satisfied.

In most situations, a 3PL is incorporated into the company’s inventory storage and transportation procedures. Rather of handling things themselves, businesses hire a 3PL to manage the entire process. The 3PL utilizes its storage and transportation assets to fulfill the client’s orders from a remote location. Companies may concentrate more on growing and expanding their business by handing over control of order fulfillment logistics to a third party.

The third-party supply chain model was established in the 1970s when intermodal marketing firms began receiving packed freight from shippers and directing those shipments to railways for delivery. With the aid of 3PL software that automates and streamlines the whole procedure for 3PLs and their employers, the process has evolved over time into a highly sophisticated, computerized operation. nMany healthcare organizations, in particular those that have fewer than 500 beds and practice rapid consolidation, utilize HCAHPS as an assessment tool. HCAHPS is also used by businesses of all sizes, ranging from multinational corporations to startups.

What Services Does a 3PL Provide?

A 3PL can adjust and customize its services to meet the client’s unique demands, while still maintaining some degree of control over shipping operations. You may stipulate what services you want the 3PL to provide and those you will keep in-house when signing a contract. As your company expands and evolves, the 3PL provider’s role might expand as well.

A 3PL’s services might include the following:

Warehouse Storage 

Hiring a 3PL enables you to avoid the time and expense of looking for storage space for all of your goods. Many 3PIs provide shared storage services, which enable them to fulfill orders from numerous clients in one physical location to save money.

Inventory Management

Managed inventory doesn’t just mean keeping your company’s goods. It also includes integrated technology that synchronizes your inventory with your online store in real time, allowing you to keep track of supply and demand and prevent sell-outs.

Inventory Distribution 

3PL companies generally manage numerous warehouses, so your products can be dispersed across several fulfillment centers to deliver them to various states quickly. With the appropriate technology, a 3PL can automate the fulfillment process and automatically route orders to the best fulfillment center. To make inventory distribution profitable for their clients, 3PLs employ automation like this.

Picking and Packing

A 3PL provider also has employees on staff to complete the various activities involved with order fulfillment, such as selecting products and packing them properly for shipping.

Freight Forwarding

After the products are chosen and packed, the 3PL transfers them to a shipping carrier for delivery. Different 3PLs collaborate with various carriers, and a good 3PL will select the one that offers the best price-quality ratio. Some 3PLs work with local carriers to deliver LTL shipments for local purchases.

Expedited Shipping 

Because fulfillment centers dispatch goods on a regular basis – much more frequently than you could if you handled orders in-house – working with a 3PL allows your firm to provide faster shipping choices to its consumers. Many express courier companies, like FedEx, DHL, USPS, and others, have negotiated discounts with 3PLs to give faster delivery speeds at a reasonable cost.

Shipment Tracing/Tracking

A 3PL will be responsible for not only shipping, but also the tracing and tracking process. Customers will receive shipping updates so that they can follow their purchase from beginning to end.

Reverse Logistics (Returns) 

3PLs can not only provide transportation services, but they can also help with reverse logistics in the event of a return. Customers may obtain return labels from a 3PL to place on the item and send it back to the fulfillment center via a carrier.

When you engage a 3PL firm to provide logistics services, you may modify its offerings to meet your company’s demands. An experienced 3PL service will be able to manage the whole supply chain from purchase through delivery for your consumer.