What’s the Difference Between a 3PL and Logistics? Before Outsourcing, You Need to Know These Things

What is contract logistics?

Logistic businesses, which may be referred to as anything from consultants to freight forwarding businesses, concentrate on a number of aspects of the supply chain from manufacturing through delivery management.

Logistics management is not just concerned with shipments and inventory. They assist with supply chain administration and transportation, rather than managing the movement of products. They ensure that ecommerce inventory reaches its destination throughout the chain by functioning as the link between shipping companies and internet retailers.

The distinctions between logistics and 3PL

What are the distinctions between a contract logistics firm and a 3PL? While they’re sometimes mistaken for one another, 3PLs and contract logistic firms may provide completely different or even synergistic services.

3PLs take on an increased role in the supply chain because of their ability to support a wider scope of logistics operations. Transportation and routing are handled by contract logistic firms, but they generally help organize transportation and routes. A 3PL firm specializes in providing comprehensive logistics services, such as warehousing and order fulfillment, inventory management, and automated delivery.

Some 3PLs have numerous distribution sites, so retailers may:

  • Keep track of everything. -> Keep a running inventory on hand
  • Allocate inventory based on demand once it has been attained
  • In addition to the total quantity on hand, View inventory on hand in real time displays how many customers are waiting to be contacted

3PLs are a great logistics partner since they provide flexibility and insight into the ecommerce supply chain, as well as technology integrations with ecommerce solutions (from inventory planning to freight shipping), allowing for an end-to-end ecommerce solution.

1. Inventory management

A 3PL with a software-enabled solution offers built-in inventory management that makes it easy to track inventory in real time, manage SKUs, and monitor inventory performance over time, compared to contract logistics firms that only specialize in delivery and transportation.

By utilizing historical order data to calculate SKU velocity, you may forecast demand and have a better sense of when it’s time to restock inventory.

By improving control over inventory management, you reduce the chance of paying more for carrying charges due to deadstock.

2. Delivery management

Logistics are an excellent way for a company to keep track of its supply chain. However, 3PLs that manage numerous fulfillment center locations can assist companies allocate goods according on where there is the most demand.

The policy of supply chains is to pass savings on to their customers and avoid wasting money. As a result, P3PLs work with major carriers as well as regional carrier partners in order to negotiate shipping rates so that they may pass the savings on to you and your clients.

3PLs employ logistics automation to provide order tracking information and deliver tracking data, so you and your consumers can follow the last-mile delivery process.

3. Warehouse management

Warehouses are the most common method of supply chain management, with millions of square feet dedicated to storage across the world. Warehouses are used by 3PLs to guarantee that inventory is received, stored, picked, packed, transported, and replenished in the most cost-effective way feasible utilizing warehouse management systems (WMS).

3PLs are the only logistics providers that can benefit significantly from utilizing a WMS. In addition to streamlining and improving back-office operations, 3PLs employ a WMS to give merchants insight into their fulfillment process.

So that merchants can know what is in transit, on hand, and items being delivered, make sure your digital platforms are connected.

4. Order fulfillment flexibility

The wrong 3PL has the systems and procedures in place to provide more adaptability throughout the retail fulfillment process, as compared to contract logistics.

5. Real-time shipment tracking

Purchase monitoring solutions are just as important to these buyers today, if not more so, than they have ever been. Customers now expect real-time shipment notifications on every purchase made online. They want to know exactly when their purchases will be delivered.

3PL coordination may help customers track their orders and get live updates from the carrier.

6. Tech integration availability

You may connect a 3PL’s technology to your existing or developing tech stack by working with a tech-enabled 3PL.