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What is 3PL and How Does it Help Your Business?

What is 3PL and How Does it Help Your Business

In today’s highly competitive market where specialization is important for growth , executing all business functions in-house may not be the best recipe for success. Outsourcing business activities to an experienced partner can often give a company competitive advantage and allow them to focus more on their own core competencies. This can be especially true when it comes to fundamental operations like warehousing and fulfillment.1

Most larger companies outsource their fulfillment to third-party logistics (3PL) providers. Small and medium sized businesses are increasingly doing the same to take full advantage of the experience that a 3PL can bring to their company. It may seem like a large jump for a smaller business to outsource fulfillment and logistics, but a third party logistics provider (3PL) can help you reach your logistics goals and increase the overall efficiency of your organization in the process. Whether your business is big, small, new or old, a 3PL is well worth considering if shipping is a high priority for your business.

 

What is 3PL

A 3PL is defined by the Council of Supply Chain Management as: “A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.”2

 

At the most basic level, 3PLs offer logistics services to support certain aspects—sometimes all aspects—of shipping operations. Typically, 3PL providers are integrated into a company’s warehousing and transportation procedures.

By scaling and customizing services, 3PLs can best meet your specific needs. You can choose the level of involvement one has based on your needs and goals. They can provide a single service or deliver a bundle of services that extend across multiple aspects of your supply chain. These services work with your processes to increase your supply chain visibility. Additionally, leading 3PLs create value in ways that enhance your operational, financial, and end customer performance.3

How 3PL differs from 4PL
Third party logistics and fourth party logistics (4PL) are both purchased professional services that help businesses plan and execute logistics initiatives.

So, what is the difference between third party and fourth party logistics? A 4PL most often focuses on the design and execution of business processes and oversight of the moving parts of a business’s supply chain. They often collaborate with multiple 3PLs (transportation and warehouse 3PLs), asset-based carriers, and warehouses utilized by the business. Conversely, as an underlying service provider, 3PLs tend to focus on discrete functions of supply chain operations.

 

Major Functions of a 3PL

There are three primary functions a 3PL does to aid businesses with long-term growth and success.

1. Transportation

When it comes to transportation, 3PLs can engage carriers, consolidate less than container load (LCL) or less than truckload (LTL) freight, track freight payment and insurance documents, and work with private fleets.

 

Working with a 3PL can also help lower your transportation costs, drive efficiencies, and develop solutions for complex supply chain challenges. And with connectivity to various phases of supply chain operations, third party logistics providers are often able to provide real-time visibility to your inventory as it is in motion.

 

2. Global Shipping

Shipping globally can be complicated and stressful for businesses. A 3PL can handle global shipping logistics considerations like customs, freight forwarding, and consolidation to relieve your allocated time and money for those processes. As a representative of a customer’s business, a third party logistics provider also works to require all trade compliance requirements are met, costs are managed, and execution goes as planned. 

 

3. Information Technology

A 3PL often uses information technology to manage e-commerce, customer relationships, transportation, and warehouse operations. Tools like electronic data interchange (EDI), application programming interface (API), and cloud-based systems are the most popular tools trusted by 3PLs. No matter which tool is utilized, the goal is to provide increased visibility to supply chain processes as well as shipments in transit.

 

Five Benefits of 3PL Providers

There are three primary functions a 3PL does to aid businesses with long-term growth and success.

1. Cost Savings
Storage and shipping are some of the largest costs associated with eCommerce retailers. When they work with a 3PL, the need for space—and the cost to rent or maintain it, along with overhead expenses—can be eliminated or reduced. When it comes to shipping, 3PLs also have relationships with carriers which results in discounted pricing that’s passed on to customers. 

In addition, many 3PLs operate out of multiple locations, so they can ship products from the facility closest to the customer (the fewer zones a product travels across, the less it will cost).

2. Experience
Logistics are the speciality of a 3PL. By using one, you can tap into the knowledge of their experts and take advantage of the latest software and equipment that they’re utilizing. For example, employees at a 3PL are pick-and-pack experts, and know the most efficient ways to get your product to your customer. They’ll also use the latest technology, which provides top-notch security, tracking, payment processing, and more.

3. Reach
Some eCommerce businesses feel bound by their location and remain local or national, unsure of international rules and regulations. Many 3PLs have a global reach, allowing businesses to bring their brand to a global audience. With estimates placing the global digital buying market at more than 2 billion, thinking outside the border can really pay off.

4. Customer Service
Being able to handle returns, exchanges, and refunds is just as important as selling a product. Of course, many small eCommerce businesses aren’t able to offer 24/7 support through email or phone to do this. A 3PL, on the other hand, has the staff to do just that.


5. Scalability
Many startups and small eCommerce companies can handle logistics at the beginning, but as they grow, space can become an issue and fulfilling orders fast enough can become difficult, resulting in shipping delays and disappointed customers. A 3PL handles fulfillment in a timely manner regardless of the number of orders and can reduce your space (and your costs) during slow periods too.

 

Conclusion

Successful businesses of all sizes know the value of partnering with an experienced 3PL. Collaborating with a 3PL can provide your business with the benefits of modern warehousing facilities, without adding additional or unnecessary costs. Warehousing and distribution are core competencies of a 3PL provider. They have the required infrastructure and expertise to manage it well and even lower the overall costs of your supply chain operations.

If you are interested in working with an experienced 3PL, send us a note to connect about how we can help your company grow. You can read Exporta Wholesale’s list of services to learn more, or check out the many companies we work with to ensure great logistics support.

 

About Exporta Technologies

Exporta Wholesale is the largest marketplace connecting suppliers in Latin America with buyers in North America. Today, we have a network of over 5,000 Latin American suppliers serving a variety of consumer goods and product categories in the United States. 

 

Exporta’s marketplace offers buyers a full service experience in the origination, sourcing and managing of products. The platform was founded on the idea that curation and service are the most important elements in the buyer’s journey. Exporta’s marketplace is building technology that addresses the pains of sourcing products internationally at attractive prices.


References

  1. https://dclcorp.com/blog/3pl/3pl-small-medium-businesses-2/
  2. https://www.thefulfillmentlab.com/blog/what-is-3pl-and-how-can-it-benefit-business
  3. https://www.chrobinson.com/blog/what-is-a-3pl-and-how-can-they-benefit-your-business/#:~:text=Third%20party%20logistics%20providers%20can%20offer%20expertise%2C%20help%20streamline%20supply,your%20overall%20value%20to%20customers.

 

 


 

 

 

 

 

 

 

 

 

 

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