Third party logistics (3PL) providers are companies that provide outsourced logistics and supply chain management services to businesses looking for hands-off product management and supply chain solutions. These services envelop a variety of different tasks including transportation, warehousing, inventory management, packaging, and order fulfillment. In the modern business landscape, outsourcing these tasks can help businesses focus on their core operations and improve supply chain efficiency while saving on time and costs.
Third party logistics is highly relevant in today’s fast-paced and global marketplace, as it allows businesses to meet customer demands quicker and more effectively. One of the most important aspects of third party logistics is warehousing and distribution services, as these services ensure merchandise is housed and delivered to consumers in a safe and optimized manner.
What is 3PL Warehousing & Distribution
Third party warehousing and distribution refers to the outsourced services provided by a third party logistics company that encompass the storage (warehousing) and movement of goods (distribution) within a supply chain. With warehousing, third party logistics companies generally provide storage, inventory management, and order fulfillment services. Distribution usually encompasses transportation management, route optimization, carrier selection, and tracking and reporting services. By hiring a third party logistics service provider to handle these aspects of the supply chain, businesses are able to redirect their in-house focus on productivity and growth.
3PLs first emerged in the 1970s primarily offering transportation and warehousing services, but overtime have evolved into dynamic companies that offer a wide range of different services. In response to technological advancements and contemporary business demands, 3PLs now offer in-depth data analytics, real-time product tracking, and advanced inventory management services among other highly beneficial services.
The Role of 3PL in Warehousing and Distribution
The warehousing and distribution services covered by 3PLs are centered around the storage and movement of goods. Under the umbrella of warehousing, the main functions and responsibilities of 3PLs include:
- Storage– Providing space and protection for merchandise prior to shipment in a third party logistics warehouse.
- Inventory Management– Monitoring inventory levels and ensuring accurate projections for future inventory needs.
- Order Fulfillment– Picking, packaging, and preparing all orders for shipment to consumers or retailers.
Under the umbrella of distribution, the main functions and responsibilities of 3PLs include:
- Transportation Management– Coordinating the overall transportation of goods between locations, which may include organizing cross-docking or freight forwarding.
- Route Optimization– Planning the most efficient methods and courses of transportation to ensure timely deliveries and minimized shipping costs.
- Carrier Selection– Negotiating with carrier services to find the most efficient and reliable providers at the most optimal price.
- Tracking and Reporting– Employing cutting-edge software to provide real-time tracking abilities and data analytics to further refine future decision-making.
A good 3PL company should be an expert in the field of storing and moving products. By outsourcing these responsibilities to a 3PL, businesses are able to optimize their supply chain efficiency and better meet customer expectations. The logistical side of supply chain management can be complex and time-consuming, 3PLs alleviate this problem and allow companies to focus on developing better products and producing more revenue.
Benefits of Outsourcing Warehousing and Distribution
Businesses rarely want to worry about the logistics of warehousing and distribution when getting off the ground and into a profitable position. 3PL distribution services offer a solution to this headache which allows businesses to focus on what really matters– their product. By outsourcing warehousing and distribution processes, businesses are able to save time, reduce costs, and improve overall operational efficiency.
Streamlining Operations with a 3PL Partner
By partnering with a third party logistics provider, businesses are able to streamline their logistics operations and improve the efficiency of their logistics without needing extensive knowledge of the current storage and shipping landscape. Navigating the intricacies of this side of business can be time-consuming and difficult. 3PLs have extensive expertise with handling warehousing and distribution, as well as resources that may not be available to companies that are just getting started. Partnering with a 3PL takes care of the logistical side of a company’s business plan and allows for an overall streamlined approach to increasing growth and earnings.
Efficiency and Cost Savings through 3PL Services
3PLs are able to leverage their expertise and find the most optimal logistics solutions at the lowest possible price. Experienced 3PLs have access to deals and agreements with other service providers that companies may not be privy to, which helps increase companies’ overall cost savings. By providing optimized logistics services, 3PLs can make businesses more efficient and put products in the hands of customers more quickly. There’s a reason that 90% of fortune 500 companies partner with 3PLs. It’s clear that the logistics industry is revolutionizing the efficiency of the entire supply chain.
Focus on Core Competencies and Business Growth
Outsourcing non-core functions like warehousing and distribution to 3PL providers allows companies the ability to focus on their core competencies. There is a definite strategic advantage to being able to apply more time and resources on driving growth and increasing profitability. Partnering with a 3PL provides this advantage by allowing businesses to concentrate on these aspects of their operations rather than worry about logistics.
Warehousing and Distribution 3PL Services
It is clear that 3PLs have many responsibilities when it comes to the warehousing and distribution services that they provide. These services play a critical role in the overall efficiency of a business’ supply chain.
Inventory Management and Control
3PLs use the best in contemporary warehouse management software (WMS) to control and optimize stock levels. With a precise understanding of inventory needs, 3PLs are able to reduce carrying costs and efficiently manage inventory levels so that businesses save money on storage prices and always have products readily available for shipment.
Order Fulfillment and Distribution
Order fulfillment encompasses the picking, packing, and shipping of inventory items. 3PLs play a pivotal role in the execution of this process by employing highly trained teams that ensure products are handled with care and speed. 3PLs work directly with carrier service providers to find businesses the best options available for cost-effective and timely deliveries.
Warehousing and Storage Solutions
3PLs provide access to storage solutions for a wide range of different product types. Whether products require storage in simple 3PL centers, cold storage facilities, or hazmat warehouses, 3PLs provide businesses with the most cost-effective solutions that ensure products will be kept fresh and safeguarded.
Value-Added Services in 3PL
If desired, 3PLs offer a variety of additional services that can be highly beneficial. These services are generally aimed at enhancing the customer experience and increasing customer satisfaction. They include:
- Package labeling
- Kitting
- Repackaging
- Return and exchange services
Technology Integration for Seamless Operations
With the perpetual advancement of technology, effective 3PLs have to stay up to date with the latest softwares and applications associated with logistics. With the overall goal being seamless operations, optimized efficiency, and supply chain visibility, 3PL providers integrate technologies like warehouse management software (WMS), Radio frequency identification (RFID), and robotic/automated systems into their operations.
Trends and Innovations in 3PL Warehousing and Distribution
The advancement of technology has brought about a myriad of trends and innovations in the realm of 3PL warehousing and distribution. These innovations have all increased the efficiency and productivity of 3PL operations, ultimately saving companies on time and cost.
The Impact of E-commerce on 3PL
The massive influx of e-commerce based businesses has had a major impact on 3PL services. With many businesses being entirely web-based, the need for 3PLs to handle the logistical side of operations has increased. It no longer makes sense for businesses that operate online to deal with logistics on their own. The increased demand for online shopping has provided many opportunities for 3PLs to expand their services and provide support for companies on a much larger scale.
Omnichannel Distribution Strategies
Omnichannel distribution is the concept of providing customers with multiple sales channels for buying and receiving products that are seamlessly integrated. This means customers can purchase a product online and return or exchange the product in store if desired. Many businesses have adopted this distribution strategy which has caused third party logistics providers to adapt their operations in order to accommodate this new style of distribution. Omnichannel distribution can result in increased sales, efficiency, and customer satisfaction if done correctly through the right 3PL. Some examples of companies with successful implementation of omnichannel distribution include Amazon, Disney, Target, and Walmart.
Automation and Robotics in Warehousing
Automation and robotics have taken on a growing importance in modern 3PL warehouses. These innovations allow for an increase in efficiency and a decrease in human error. While they can be expensive to implement, they seem to be trending towards a long-term cost effective solution for 3PLs. While there is considerable controversy surrounding the replacement of human workers with robotic machines, these automated tools are designed to streamline menial tasks and increase the overall productivity of storage facilities.
Real-Time Tracking and Supply Chain Visibility
Supply chain visibility has become a top priority for consumers in today’s digital world. People want to know where their products are and exactly when they will receive them. 3PLs have introduced high-tech tracking technologies into their supply chain solutions that allow customers and suppliers real-time updates from the 3PL distribution center to the consumer’s doorstep on all orders. This helps provide all parties involved with better insights and control over their shipments.
Choosing the Right 3PL Partner
Just like with any other industry, there are a plethora of 3PL partners that you can choose from. The trick is picking the one that best suits your needs, goals, and scope of operations. It is always a good idea to consider all options available before making any final decisions. Choosing the right 3PL partner can be the difference between going under and making your business profitable. Let’s look at some of the main factors you should consider when selecting a provider, the key elements you should assess when looking at a 3PL’s warehousing capabilities, and the significance that scalability and flexibility have on your overall decision.
Factors to Consider in Selecting a 3PL Provider
Regardless of the size or type of your business, there are universal factors that are essential for consideration when selecting a 3PL service provider. These factors include:
- Industry experience– Your 3PL partner should have extensive experience providing service within your industry. While newer 3PL companies may offer enticing rates, and larger more well known companies may seem more attractive, it’s always better to go with a service provider that has a proven track record of success with businesses similar to your own.
- Overall Capabilities– You need to know up front what your potential 3PL’s overall capabilities are. All successful businesses have growth and increased profitability in mind, you need to make sure that your 3PL partner is able to accommodate your growth and expansion. If global commerce is a goal your business has set, make sure your 3PL partner is able to accommodate this objective.
- Reputation– Much of the logistics side of business involves interacting with other service providers that help put your product in the hands of consumers. Partnering with a reputable 3PL is of the utmost importance for ensuring customer satisfaction and smooth operations.
- Technical integration– There’s no doubt that technology is going to perpetually advance, and your 3PL needs to understand this. A good 3PL partner will already be using whatever cutting edge technology is available at the moment, and will also have their eyes set on how they can improve their operations with future technology once it’s released.
Assessing 3PL Warehousing Capabilities
Warehousing is a large component of 3PL services. Assessing a 3PL’s warehousing capabilities is crucial to choosing the right partner for your specific and unique business needs. Be sure to consider what types of facilities your 3PL partner has access to and if they are suitable for the storage of your product. Also consider their location in relation to your primary shipping destinations, and what types of technologies their warehouses use and how that may affect overall supply chain efficiency.
Scalability and Flexibility in Distribution
Be sure to consider your potential 3PL partner’s ability to scale and adapt to your distribution needs. If your product has seasonal popularity, you’ll want to make sure your 3PL is able to handle and efficiently adapt to fluctuating demand. The right 3PL partner will have an intimate understanding of your business and will offer adaptable solutions to accommodate your growth.
Final Thoughts
Partnering with a 3PL service provider is one of the best ways you can optimize your business’ efficiency and increase your overall cost-savings. With the rising popularity of e-commerce, finding the right 3PL to help your business scale and grow is crucial. Warehousing and distribution are two of the most important aspects of your 3PL partner’s responsibilities. Finding a 3PL partner that can accommodate your warehousing and distribution needs efficiently and effectively can help streamline your business operations and increase your overall profitability. With the never-ceasing advancement of technology, 3PL service providers are only becoming more relevant and necessary. There’s no doubt that partnering with a 3PL is the way of the future.
Get Started with ShipCalm Today!
ShipCalm is your go-to 3PL service provider. With years of experience and a lengthy track record of success across a wide range of industries, our services are sure to help your business grow and prosper. Reach out today for a free consultation and learn how we can help you streamline your logistics and increase revenue. We’re here to be the 3PL partner your business needs.
