September 24, 2019 | Logistics Blogs
Third party logistics or 3PL is a service that enables enterprises to outsource or make use of third -party businesses to carry out tasks to completion in its supply chain.
Working with a 3PL provider is a partnership and must be treated as such rather than as a transactional relationship.
It could be to expand customer base, venture into new markets, or create positive consumer experiences, but more and more businesses — big and small — are looking for external support and expertise to run their supply chain more efficiently and gain competitive advantage. And that’s where a third-party logistics (3PL, also known as TPL) provider comes in.
Third Party Logistics firms specialize in logistics and thus have a more extensive network than your company’s supply chain function. They have exclusive relationships within the logistics sector, and can have greater influence during negotiations, They can also help to offer greater volume discounts to clients. All of this can minimize overhead costs.
By partnering with a 3PL supply chain management firm, you can also save on making huge infrastructure investments as it can provide transportation, warehouse space, staff and tracking technology, among other things.
In today’s complex global market scenario, it is tough to anticipate and accommodate internal expertise in all the capacities and regions required. A 3PL service provider has knowledge and experience in matters such as transport documentation, import and export, international compliance and economic regulations, for instance. Businesses looking to expand into international markets can benefit from the logistics support and know-how that their partner can provide, thereby reducing costly delays, cutting down the cycle time, and making the entry into a new region smoother.
Outsourcing logistics will give your organization the leeway to focus on its core competencies instead of getting involved in the management of non-core but critical functions. Your business can enjoy the benefits of logistical expertise without deploying internal resources.
Another advantage of third-party logistics in supply chain management is that it offers enterprises the flexibility and scalability to utilize supply and distribution resources based on current business needs. Thus, when sales are down, there are no redundant investments and unutilized resources, and when there’s a surge in demand, enterprises can upscale.
The role of third-party logistics in supply chain management is to drive business growth by giving companies access to markets where they don’t have established presence. Being able to manage inventory in a new market without having to spend money on warehousing, equipment, and labor can save money, as well as the effort of learning the logistical nuances of a new market.
All of the aforesaid 3PL benefits will lead to improved services and response time, timely deliveries and greater brand reliability. This translates to satisfied customers — the fundamental goal of all businesses.
How to Select the Right 3PL Partner
Do you need external help to select a 3PL provider? A consultant or consultancy knowledgeable in the domain could make the selection easier.
3PL or Third-party logistics refers to companies that offer comprehensive solutions for enterprise supply chains in packaging, warehousing, transportation and order fulfillment. Outsourcing an enterprise’s logistics to a 3PL provider can help solve complex challenges in logistics management and make your supply chain a more agile, responsive function.
3PL stands for Third-party logistics in supply chain management. 3PL companies are service providers that offer enterprise management services such as packaging, warehousing, transportation and order fulfillment.
3PL helps companies to focus on their core competencies, thus fostering business growth, market expansion, and innovation. Outsourcing logistics services to a 3PL provider can drive cost savings, allow access to cutting-edge technologies in logistics, and improve scalability, flexibility, and customer satisfaction.
3PL companies can offer comprehensive logistics solutions for your company. You can use 3PL to expand your customer base, venture into new markets, and create positive consumer experiences. 3PL can be used by big and small businesses looking for external support and expertise to run their supply chain more efficiently and gain competitive advantage.
Before selecting a 3PL partner:
Every business must ensure that its 3PL partner has sound financial stability and can integrate with internal stakeholders and the existing team.