Third-party logistics, or 3PL, is where a business uses the services of another to outsource some or all of its order fulfilment process. A third-party may be used for warehousing, picking and packing, transportation or delivery of goods, as well as offering more services that add value. There are many reasons why 3PL is a good option for businesses. Here’s a closer look at how 3PL works, and the benefits it may bring.
Different Types of 3PL
The basic type of 3PL is where another company runs activities such as warehousing, picking and packing, and distribution on behalf of a business. The business is still in full control over its orders but uses a third-party as a facilities or service provider.
Upon this base, further services by the 3PL can be added. This could include tracking and tracing of incoming and outgoing goods, supplying packaging materials, managing inventory, and any other service that is beneficial to its customer. Some business may even outsource their entire ordering and customer management to 3PL.
The level of service a business requires from a 3PL company will entirely depend on its unique business needs, as well as what is financially viable.
Benefits of using 3PL
- Saves Time – having a third-party handle the order fulfilment process allows business owners and staff time to focus on other aspects of the business.
- Saves Money – as a business grows, an increase in customer orders can become more expensive to fulfil. By outsourcing to a third-party that already has the equipment, space and staff needed, it is more cost-effective than managing it in house.
- Expertise – when dealing with a third party, they already have the industry knowledge and expertise for a smooth and efficient operation. They can also help you reach a wider base of customers by shipping worldwide.
Is 3PL right for your Business?
If your business is enjoying growth, but this growth is coming at a faster rate than your current systems or premises can cope with, then using 3PL may be a good option.
When you have more orders than you and your staff can deal with daily, you may find yourself working to catch up. This means you are putting less time and energy into other areas of your business.
Similarly, if you don’t have enough storage for your inventory, you may become overcrowded with goods and not have the room to organise everything efficiently.
If this sounds like your business, and you don’t have the money to invest in the space or staffing you need to keep on top of demand, using a 3PL may be the answer.
When deciding on what 3PL company to work with, there are some essential considerations. It needs to be a company that is right for your needs, and one that you can trust to help your business grow.
At LTS, we fulfil a range of 3PL services that can be tailored to your business. Call or email today to find out more, or to get advice from our team.
0121 753 0080