Inventory management, warehouse logistics, and order fulfillment can be challenges for any business. But a good Third-Party Logistics partner can help many businesses navigate supply chain issues.
Order fulfillment is an integral part of most businesses, but for some – especially those that are rapidly growing or in the eCommerce sector – it makes sense to outsource complicated fulfillment issues to a third-party logistics, or 3PL firm.
The right 3PL partner will have the labor, resources, infrastructure, and capital to handle all your freight and logistic service needs. This will allow you to concentrate on sales, business strategy while your partner deals with inventory, warehousing, and shipping issues.
So what exactly is a 3PL? Basically, it refers to any outsourcing of transportation or logistics services. This typically involves any activities related to shipping, storing or delivering a company’s products.
The best 3PL partners use cutting-edge technology and strategic approaches to managing their client’s supply chain and transportation needs.
There are three major functions of any 3PL provider. They are:
- Warehousing – Specializing in storing and distributing goods is one of the most basic functions of any 3PL. The best partners offer customizable strategies for handling storage, distribution, and product transportation. They may also have warehousing options in multiple locations across the country, reducing transit time which saves their clients money.
- Distribution – Simply storing a client’s inventory for them isn’t enough, so a good 3PL partner will assist with outbound order fulfillment, picking and packing, kitting and assembly, custom labeling, and sometimes even minor manufacturing. The outsourcing of these time-consuming jobs allows the client and its employees to focus on their core business needs.
- Shipping and Receiving – Managing a client’s entire shipping process from start to finish using the latest technology helps streamline efficiency. This is typically done through a Transportation Management System (TMS) or integrated freight services. This allows the 3PL partner to handle carrier relations, freight data, and reporting requirements in the shipping process.
While a 3PL partnership can have benefits for almost any business, some industries and companies in certain stages of growth are particularly good candidates. These include:
- Emerging eCommerce – If you are an eCommerce business owner, order fulfillment is an integral part of your operations. As your business grows, you may find that fulfilling customer orders in-house is no longer feasible. Picking the right 3PL partner allows eCommerce merchants to accomplish more, with the tools and infrastructure to automate retail order fulfillment.
- Rapidly growing/expanding businesses – Outsourcing warehouse and order fulfillment to a capable third party can help fast-growing businesses concentrate on sales and strategy rather than the nitty-gritty details of supply chain logistics.
- Businesses short on space – A good 3PL partner is likely to have massive warehouse space, often in multiple locations across the country. This leads to shorter transit times, saving time and money.
- Businesses struggling to find qualified employees – A quality 3PL partner will have a team of logistics and supply chain experts, freeing you from hiring the same. Third-party logistics providers have professional teams that will help you streamline each link in the supply chain and bring industry knowledge to manage seamless processes and deliver desired results.
- The food industry – From farm-to-table to wider distribution, third-party logistics can help you consolidate loads, making delivery more efficient. 3PL providers typically have temperature-controlled distribution centers, ensuring your products make it from start to finish with optimal quality.
- Pharmaceutical and healthcare – Industries with strict regulations require top-notch fulfillment expertise. Pick-and-pack warehousing can help you keep control of your inventory and costs and temperature-controlled warehousing ensures product quality and safety.
Of course, not all 3PL firms are created equal. Here are some tips on choosing the one that best fits your business needs:
- Technological sophistication. It’s no longer good enough to just warehouse and transport goods. A useful 3PL partner will have state-of-the-art technology supporting a comprehensive range of services. The partner you choose should have enterprise-level technology that streamlines the entire transportation process from order to delivery. It should also integrate with your order management system and provide business intelligence to help you make faster, smarter decisions.
- Reputation. A reliable logistics partner should have a reputation backed up by satisfied customers and transparent metrics.Do your due diligence to ensure the one you choose has happy vendors, carriers, and employees. Reputable 3PL partners rely on their network, team, and industry relationships to offer the best solutions.
- Customization. The best 3PL firms will be able to customize their solutions for your needs. For example, if you are in eCommerce, business-to-business or retail distribution, you will want a partner that can work in a multi-channel capacity and offer solutions that integrate with your supply chain. In packaging and shipping, you’ll need a partner that can customize customer experience in a detailed fashion.
- Security. A reputable and responsible 3PL partner will be up-to-date on constantly evolving safety regulations and will also be able to share with you the steps it takes to ensure the safety of its operations and the goods and materials it transports. Look for a partner that takes security – including cybersecurity – seriously. Protecting data and safeguarding financial information is critically important.
- Scalability. Be sure your preferred partner is able to handle the volume of products, recalls, and customizations necessary to maintain your operations and reduce costs.
Choosing the right 3PL provider takes some forethought, but finding one that takes a strategic, technological and customizable approach to manage your transportation and supply chain needs can be a game-changer.