By Chris on Mar 22, 2018, 6:43:14 PM
Third-party logistics, also known as 3PL or TPL, are outsourced logistical services connected with your company managing warehousing, monitoring, and distribution, among other services.
Everything you need to know about 3PL.
If your business doesn’t have space, time or money to operate and manage a complete warehouse and distribution network, you can cut costs and increase profits with the help of a third-party logistics provider who can store goods, monitor and record inventory flows, deliver and return items to and from the customer.
Working with a 3PL provides a lot of advantages. Whether you ship small volumes or have complex distribution needs, outsourcing allows you to spend more time focusing on the other aspects of your business such as developing, marketing, and closing the sale of your products.
How do companies manage to accomplish a successful delivery?
Order fulfillment is the answer! The complete process goes from the point of sales inquiry to the successful delivery of a product to the customer. Every industry operates their fulfillment operations differently. But there’s one thing that every 3PL has in common: the faster an order can be delivered, the happier a customer is going to be.
How do 3PLs fulfill your orders?
- Receiving inventory: The third-party logistic provider receives and stocks the inventory in-house, being responsible for keeping tab of it and labeling it.
- Storing inventory: The primary task on the list is to shelve the products and keep a close eye on what items come in and out so that they can ship the orders without any delays and customers are satisfied.
- Receiving the customer’s order: When processing an order, the product needs to be immediately delivered somewhere else. The company checks the order number and to which customer it belongs.
- Pick and pack: The individual components of an order are gathered from master cartons (pick) and then placed into a box or envelope addressed to a specific recipient (pack). In the pack process, there are one or more products equal or different, depending on the client’s instruction to the 3PL. Some 3PLs provide custom packaging options (hint: we do!) allowing you to use your shipments as an opportunity to enhance your customer’s experience with your brand.
- Invoice or bill: As the name implies, it’s related to a sale transaction and indicates the products, quantities, and agreed prices for products or services the company had provided the customer.
- Shipping: According to the address given by the buyer, the 3PL finds the ideal delivery service company to ship your product, for example, FedEx, DHL, UPS or USPS.
- Order Fulfilled: The client has confirmed that the order has been successfully delivered and has been accepted.
Are all 3PLs the same?
There are a variety of different 3PL companies, and they all offer different levels of support.
- Standard 3PL Providers: These companies perform the most basic logistics functions, such as packaging, shipping, warehousing, and distribution of their clients’ products.
- Service Developer: In addition to the services provided by a standard 3PL company, this kind of company will offer services that add value to the client company’s product. Examples include tracking and tracing of the package, cross-docking, enhanced packaging, and secure shipping.
- Customer Adapter: This type of 3PL firm typically has more extensive relationships with its client companies, and as a result, usually has a smaller number of client companies. They take control of the client’s logistics functions.
- Customer Developer: This kind of 3PL firm has the most integrated relationship with its client companies. The firm takes over all details of the company’s logistics functions and often makes many changes to them. We are an example of a Customer Developer TPL, providing specialized and flexible fullfilment solutions for growing, brand-focused companies.
You need to know which third-party logistic is right for you. Choose one that can handle your current volume, but that will also be ready to handle your volume if you suddenly increase your demand.
Also, check out the case studies of 3PLs; it’s an excellent indicator for you to analyze how they did their work among other customers.
Getting outside help when choosing a 3PL might simplify the process and reduce staff and time commitment. Seek someone knowledgeable in third-party logistics which can demonstrate experience with a broad scope of outsourcing operations and providers.
Some benefits of working with a 3PL
- You won’t have to manage your own warehouse or inventory, and you’ll save money on costs like electricity and rent.
- There’s no need to worry about the paperwork, billing, audits, training, staffing, and optimization involved to get your goods where they need to go.
- You can focus on other areas of your business such as product development, customer relationships, marketing, branding, letting the 3PL staff manage the logistics.
- 3PL professionals will ensure your needs are met, by using the fastest, most efficient, and cost effective warehousing, packaging and shipping methods.
What happens if a product is not what your customer expected?
Well, think about how the supply chain works: from raw material, to the manufacturer, to the distributor, and finally to the customer. Turn it around. That is called Reverse logistics, defined as the systems and methods used to move previously-shipped goods from a customer back to the manufacturer for one of many reasons, some of which include:
- To fix product errors
- To return an unwanted product
- To service the product
- To properly dispose of the product’s materials at the end of its service life
Every company’s main goal when employing reverse logistics should be to transport returned goods and materials in a way that minimizes risk and maximizes their value increasing the customer’s satisfaction.
When the customer returns the product, there’s a possibility that they’re unsatisfied with it. Several companies use the Simple Return, which implies including a shipping label with a barcode in the good a customer bought that is linked to their account. This way, they can keep track of the status of their returned item.
Just as the product is returned, it’s repaired if faulty and then stocked for resale preventing high inventory costs and wasted materials, and it also creates a potential for the item to be still sold for profit.
Reverse logistics is also helpful when a product has reached the end of its service life. Numerous consumers don’t know how to get rid of or recycle products that contain harmful materials. Third-party logistics know exactly what materials are in every good. Logistics providers use careful planning to minimize the number of miles their drivers cover and, therefore, the amount of fuel consumed.
As we constantly become more conscious of our environment, it’s important to monitor what happens to all used materials. Sustainability is about efficiency and efficiency is about using fewer resources to accomplish the same things.
As the world’s technological capabilities continue to grow in the coming years, more companies will employ third-party logistics. Outsourcing logistics is the future of businesses. A logistic specialist can help your business handle returned products more efficiently which can save you time, space, money and manpower, and you can continue to focus on what you do best.