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Third-Party Logistics Explained

The concept of third-party logistics or 3PL, when not properly understood can be complex and complicated. However, every major business owner needs to understand this concept as it could be the difference between their ability to run their product-based business effectively or not.


Understanding the world of third-party logistics may not be simple, especially with the many terms that are involved, however, this blog post seeks to break things down to the very basics so that business owners can better understand what they have been missing while also exposing themselves to one of the tips on creating more storage space.


Who Is A Third-Party Logistics Provider?


Third-party logistics providers are business professionals saddled with the responsibility of taking the stress of the supply chain pipeline from you, as a business owner. These logistics professionals utilize solutions that they have already carved out for your business to address your needs while also making sure that your customers are properly served. Although an external party, third-party logistics providers can be absorbed into your team as they are important in the overall process of order fulfillment.


There is a major misconception when it comes to third-party logistics providers, many business owners believe that a business must have attained a certain level before it can tap into the immense benefits offered. This is largely untrue as many third-party logistics professionals are open to working with all kinds of businesses, irrespective of the size, to make sure that they get the help that is needed.


What Does A Third-Party Logistics Provider Do?


These companies offer their services for a fee. The fee may be based on a flat-rate structure or may be a factor of the weight of the shipment. In other cases, the cost of the services rendered will also depend on other factors like storage costs, and more. In general, a third-party logistics company carries out all of the processes involved from the point of merchant pickup to the customer’s delivery.


As part of the services offered, business owners can enjoy solutions like transportation, warehousing (which essentially reduces the space needed by the business to operate at a fee), pick and packing solutions, inventory forecasting, order fulfillment, packaging and freight forwarding, distribution management, freight consolidation, as well as last-mile deliveries.


When does a Third-Party Logistic Company Come into Play?


The third-party logistics providers are relatively new to the supply chain market with no more than 40 years of experience and presence. However, in the time between the sector’s introduction and now, many businesses have been able to shed a considerable weight by not worrying much about the supply chain as well as the logistics involved in getting their products to the consumer.


Several situations mark the entry point of the third-party logistic company. some of the common instances that warrant a third-party logistics company include;


– What your business has run out of storage space and is in need of a warehousing facility

– When you wish to offer expedited shipping advantage to customers

– When you wish to save money on logistics, storage, and shipping of products to the target consumer

– When you wish to create more room for your business to grow

– When you are in search of a solution that addresses the time-consuming process of shipping and product deliveries.