3PL (Third Party Logistics) providers may offer a variety of services including warehousing, order processing, cross-docking, inventory management, packaging, and freight forwarding. 3PL is an entity that allows the service of drop-shipping, in which the company’s distribution needs are outsourced to a third party. 3PL turns the supply chain into a streamlined and economical one, allowing the business to focus on its main activities. 3PL combines all of those services under one roof.
How does 3PL leverage your business?
If your company expands, managing logistics can be a complicated endeavor. It’s time to seek out 3PL providers for all warehousing needs and have your company grow. As a company owner, it is vital to understand how 3PLs work in order to see your company expand.
Third-party warehouses are provided by a third-party company in a commercial environment. Third-Party Logistics is a great way to save lots of costs. Third-party warehousing is the most cost-effective alternative for business owners.
3PLs provide their services on substantially smaller budgets than do other businesses. They tend to use economies of scale because costs are much lower than those of individual purchases and hire.Firms can benefit from cost-sharing as a warehouse isn’t needed within the operation, thus lowering operating costs. 3PLs offer many different value-added services, such as kitting, custom packing, assembly, blister packing, labeling, product destruction, reverse logistics, international trade compliance, and so forth. There’s a never-ending list of services 3PL provides, but these may vary from company to company.
Let’s look at some of the advantages of using a 3PL provider for optimizing the business:-
- Cost Savings: –3PL companies have better connections with freight companies than individual freight carriers. Due to their connection with many companies, they are able to get volume-related concessions. Warehousing has many costs attached to it, such as maintenance and operational costs. 3PL companies decrease all these costs, resulting in another reason why companies should utilize these providers.
- Flexible Scalability: –3PL companies help to reduce fluctuations that are observed throughout the year. You don’t need to spend as much money; 3PL companies do this for 3PL businesses to help reduce temporal apprehensions faced by businesses. Additionally, companies can use 3PL services to expand into new markets without the need for additional space or equipment.
- Enhanced customer experience: –3PL providers engage a vast network that allows for fast delivery in virtually every country corner. With increasing trends toward same-day or next-day delivery, shipping speed is an important element in assessing a company’s reputation.
- Mitigate risk: – Shipping delays do happen often, and 3PL providers are responsible for such delays, or even explore alternatives to satisfy your orders on time. For shipping abroad, they even conduct paperwork, customs, levies, and accessories that cost a lot of money and cause delays.
What are the latest trends in the 3PL Industry?
Businesses these days rely heavily on technological advancement, so it is essential that 3PL companies take advantage of new innovations and put them to use in their field. Let’s take a peek at a few of the technological innovations that are leading the race these days.
- Robotics:- By 2020, many third party logistics providers (3PL) will start implementing robotic equipment to cope with e-commerce competition. It is predicted by the Robotics Industries Association that 485,000 robot trading units will be sold total, adding 18 units every year, the compound annual growth rate (CAGR). Due to the COVID 19 pandemic, 3PLs used robotic devices to manage e-commerce demand.
- Analytics: – 3PLs are now making data-driven decisions based on 3PLs’ analytical skills in 2020. In the 2020 24 Annual Third-Party Logistics Report, 94 percent of shippers believe that analytics help shippers see immediately what they need to do to achieve full goals and visibility of order and delivery. 3PL companies have started using data science teams to translate raw data into meaningful insights.
- Internet Of Things (IoT):- Community identity allows visibility of products in transit by using IoT chips. The supply chain system of third-party logistics utilizes RFID (Radio-Frequency Identification) tags to identify products in transit, removing the physical constraint.
To sum up, 3PL warehousing is a service offered by warehouses to store, pick, pack and ship products on behalf of other companies. It typically includes receiving, warehousing, packaging, order fulfillment, putaway, shipment, invoicing and returns handling. 3PL warehousing is a timesaving service that enables organizations to focus on core competencies by outsourcing warehousing management.