A third party logistics company can store your inventory for you. It will pick, pack, and ship your products. 3PL is the vital link between your manufacturing operations and your customers. When your order fulfilment operations run smoothly, your customers are happy and your business grows. It’s not an exaggeration to say that excellent fulfilment is the key to success for eCommerce companies.
Before you start working with a third-party logistics company, it’s important to understand what 3PL is. This piece details how you can integrate third-party logistics into your operations, and how to find the best 3PL partner. If you already know that this is what you’re looking for, check out our 3PL services.
What is third-party logistics?
Third-party logistics, or 3PL, is used interchangeably with fulfilment warehouses or fulfilment centres. Companies that provide 3PL services offer many of the same services as order fulfilment companies. These services include:
- Warehousing
- Inventory management
- Shipping and receiving
- FTL and LTL freight shipping
- Picking and packing
- Kitting and customization
- Reverse logistics (returns)
A third-party logistics company acts as an eCommerce fulfilment company. It provides all the services you need to outsource your logistics operations.
Different 3PL services companies specialise in different types of fulfilment and warehousing. Some are equipped for cold fulfilment. These warehouses can store and ship food products that need to be refrigerated or frozen. Other 3PL companies are prepared to store and ship hazardous materials. Red Stag Fulfilment is one of the top third-party logistics providers for heavy, bulky, and high-value products.
Picking
When a customer places an order, it’s time for the 3PL fulfillment process to begin. (You may have heard the phrase “pick-and-pack fulfillment” before — this is the first half of that.)
When an order is sent to your 3PL, it is assigned to the warehouse picking team. The picker receives a picking list of the items, quantities, and storage locations at the facility to collect the ordered products from their respective locations.
Packing
When all items in an order have been picked, it’s time to get them securely packed for shipping. The packing materials used will depend on your 3PL’s capabilities, your brand preferences, and the items being shipped.
The most common standard packing materials include:
- Unbranded boxes
- Bubble mailers
- Poly bags
- Packing tape
- Dunnage
- Paper-based dunnage
Some 3PLs will charge for packing materials as a separate line item, while others include them as part of their fulfilment management services.
Shipping
The next step is shipping your order. Most 3PLs will purchase and print shipping labels on your behalf. Some 3PLs have preferred carrier partners, while others compare shipping costs from a variety of carriers. The latter helps 3PLs offer clients the most affordable pricing possible for the delivery speed that each customer chooses.
Carriers such as DHL, USPS, and UPS pick up orders from 3PL warehouses to ship. The carrier and shipping speed for each order depend on the 3PL’s partnerships and policies as well as the ship options offered by the client and selected by the end customer.
Once the order ships, 3PLs with the integrated technology mentioned above will automatically push tracking details to merchants’ online stores.
Returns
Many 3PLs also offer return processing services. If a customer returns an order by shipping it back to your 3PL, your 3PL will process the return and restock or dispose of the item depending on their policies and your preferences.
You can choose to have your 3PL provide return shipping labels for your customers. This offers convenience for both you and your customers; you won’t have to handle returns in-house, and customers can easily track the status of their return order.
Business Benefits of a 3PL Service
Moving on from “What is a 3PL?”, it’s equally important to ask “Why choose a 3PL service?” Looking at third-party logistics from a business case, it provides companies with a number of benefits compared to DIY options.
Improved Accuracy and Speed
Consider what it takes to start a warehousing and inventory operation from scratch. You need equipment, space, and personnel, not to mention tools to help you manage the day-to-day operations.
This is a necessary cost of doing business; however, you don’t have to start this process from scratch.
Take advantage of the processes, workflows, and technology a specialist can bring to your business. Chances are, they have warehousing and inventory down to a science and can help you move faster and more accurately than if you handled it yourself.
Reduced Overhead Costs
Logistics costs can add up quickly when you go it alone. The cost savings are one of the biggest reasons why 3PL services are becoming a preferred alternative. They negotiate rates with shipping companies to help you keep costs down. They can also order packing materials and supplies in bulk to help you save even more.
Shipping and Handling Compliance
Shipping a travel mug or a dog bed might not come with any unique considerations. But what about fine art? Wine? Household chemicals?
3PL providers are the experts when it comes to shipping and handling compliance. They can help you navigate shipping challenges and ensure items are packed safely and securely for the best results.
3PL Pricing Models
Third-party logistics companies factor in several operational activities to determine pricing. Among these activities that a 3PL may charge for are:
Receiving and putting goods away
- Storage costs – Often your 3PL will charge a certain amount per cubic foot.
- Fulfilment fees – Some 3PLs charge flat-rate fees for items based on size, weight, and category. You may also direct your provider on a specific method for packing and shipping paying actual or discounted
- carrier fees. Typically fulfilment fees include pick and pack, packaging, and shipping with a carrier.
- Returns processing – A flat fee to handle item returns which may include disposal or restocking.
Reference-
https://transport.vic.gov.au/