E-commerce business is growing day by day. An E-commerce business needs a large space to store the product items from where they do the delivery to the customers. But every business doesn’t have the ability, experience or time to handle everything on their own. They look to others for support then. These companies hire third party logistics companies to handle these todos. 3PL Companies are take care of the list of tasks they can’t do or do not want to do. If you are new in this ecommerce industry, you should know what is exactly 3PL service provider and what they do and what are 3PL benefits.
What is 3PL Logistics?
Council of Supply chain Management has defined 3PL 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.”
Many people assume that third party logistics companies got their start in 1970s, that’s only when they got their name. The company with no logistics department usually take help of the 3PL company. In turn, the 3PL company performs particular parts or all logistics related activities for the client.
Some of the activities done by the third-party logistics are:
- Inventory Management
- Warehouse Storage
- Freight Forwarding
- Shipping and distribution
- Customers Clearance/declaration
- Packaging and warehousing
All these services provided by a 3PL logistics company will be carefully documented and mentioned in the contracts, agreements and service level agreements (SLAs). These documents will detail the scope, duration, cost and other vital aspects of any services provided by 3PL service provider.
Benefits of 3rd Party Logistics Providers
One of the main functions of a 3PL logistics company is to manage the safe storage of goods until they are needed elsewhere. There are lots of benefits of 3rd party logistics service provider, we have mentioned below:
- Cost Saving
Storage and shipping tasks are some of the biggest costs associated with e-commerce retailers. When they work with a third party logistics company, the need for storage space, and the cost to rent or maintain it, along with overhead expenses. This can be eliminated or reduced. When it comes to shipping, 3PL companies also have relationship with carriers which results in discounted pricing that’s passed on to customers.
In addition, many 3PLs operate out of more than one locations, so they can ship products from the facility nearest to the customer.
- Network Capacity
Vetting of carriers for equipment, insurance, and qualifications is a large undertaking. Before you hand over your product to a driver, you need to ensure that he is the right person or company to represent your organization. A 3PL logistics service provider works faithfully to build their carrier network to include only qualified and reliable service providers.
Since, having the qualified networks, 3PLs can help you secure with more capacity. A non-asset based 3rd party logistics will have a diversified carrier base. They have relationships with thousands of drivers. This means, they have access to various possibilities and solutions. You can save a greatest amount of time by calling a 3PL company instead of calling on multiple carriers.
- Experience
Logistics are the speciality of a 3PL company. By using 3PL, you can tap into the knowledge of their specialists and take benefits of the latest software and equipment that they’re utilizing. For example, employees at a 3PL are pick & pack experts, and they know the well planned ways to get your product to your customer. They will also use the latest technology, which provides top-notch security, payment processing, tracking, and more.
- Scalability
With the help of 3PL companies, you can easily handle high seasons. Those companies can help you quickly respond to increase in demand or expansion. 3rd Party logistics companies are connected to service providers nationwide and can more easily respond to flux, linking you to resources without any risk or legwork.
Reach
Few Ecommerce businesses feel bound by their location and remain local or national, unsure of international rules and regulations. Many 3PL logistics companies 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 3 billion, thinking outside the border can really pay off!
- Technology Access
A 3PL can take responsibility and costs associated with investing in technologies that improve your operations. These technologies are able to share with more than one customers. They can deal with the investment sustain maintenance costs, passing all the benefits on to you. There are below beneficial technologies provided by 3PLs:
- Transportation Management Systems (TMS)
- Real-time Order Tracking
- Route and Consolidation Optimisation Tools
- Data Analysis and Reporting Tools
- Freight Audit and Payment Solutions