What is a Third-party Logistics Provider?

Introduction: 

Today’s global marketplace depends on growth, customer satisfaction, efficient supply chain management and eCommerce and third party logistic providers play a significant role in optimizing the supply chain by outsourcing logistic services. This service provider is an important factor in your business. Businesses that are producing consumer products find it difficult to operate in-house logistic operations as well as eCommerce operations. Businesses choose this service provider because it helps them in order fulfillment and saves money and time. Services that are offered by this provider are not only limited to seamless logistic operations or supply chain management but also help companies that are involved in shipping items. Overall import-export companies are getting leverage by outsourcing this logistic provider. If you want to know about this service then One Union Solutions discusses this service concepts, roles, and responsibilities in this blog. 

Third Party Logistics Explained

This service is an outsourced partner that offers a wide range of supply chain management and logistic services, and eCommerce fulfillment services and generates intermediate links between end customers and manufacturing operations. When order fulfillment and various management services run seamlessly in a company that means customers are happy with the services that your business offers and this service optimizes various operations coordinating and managing specific parts of the supply chain process. 3PL is a service that helps businesses focus on their core operations and handle order distribution, order fulfillment, and logistic operations, allowing increased efficiency and cost savings. 

In other words, a third party logistics service is also called a fulfillment company or fulfillment center. This service helps businesses to pick, collect, pack, and ship orders. This service allows businesses to use more tools and infrastructure for retail order fulfillment. This service has a wide spreading network which brings efficiency to businesses. Because this service is acquainted with deep knowledge of regulatory requirements, for this reason, they seamlessly sort out logistic challenges. Furthermore, this service offers scalability and flexibility to businesses and gathers their extensive service offerings which make them valuable partners for businesses that are seeking to streamline operations and increase overall supply chain management. 

More about this service: Understanding 3PL vs 1st party, 2nd Party and 4PL logistic 

As discussed earlier this service performs as an intermediate role between clients company and other service providers. Also, this service streamlines complex processes into a simple process. Complex processes such as transportation, order fulfillment, inventory management and help the company by simplifying these operations. 

However, there is first-party logistics which operates as an in-house logistic activity, and second-party logistics which operates as a cooperative partnership with particular carriers. But 3PL service needs to be outsourced because it operates as an individual service whereas, 4PL acts as a high level of outsourcing logistic partner to companies. 4PL serves as a single point of contract which takes on a more holistic and strategic approach. Both 3PL and 4PL provide seamless logistic and supply chain management services. 4PL services have access to 3PL services; they can arrange 3PL services for their clients. 

Functions and Services Offered by Third Party Logistics Provider

Here are the lists of some key functions and services:

Warehouse Management

This service manages warehousing facilities and storage in warehouses which is a critical function in the supply chain. This service provides advanced warehousing management which streamlines storage space in warehouses and also helps to collect and pack goods. Warehouse management is important for businesses to reduce transportation costs. Without this service, businesses can not strategically manage warehouses which results in higher transportation costs to businesses. 

Packing and Value-added Services

3PL provides value-added services, businesses can save time and costs by using these services to personalize items in response to market needs or consumer wants. Also help with packing, and labeling when they are ready for transportation. 

Inventory Management

This Outsourced logistic provider helps businesses manage inventory levels because this service is equipped with inventory management systems that help businesses track goods movement in transit, to monitor goods stock levels in warehouses and storage. Also, this service provider makes sure that inventory stock is available at the correct location so businesses do not have to worry about whether inventory stock is available or not. 

Transportation Management

This outsourced logistic provider takes charge of transportation management making it a seamless, structured management system. Usually transportation management systems help to coordinate and organize the movement of goods from the point of production to their original destination but this entire process faces many difficulties that lead to disruption to this process this service provider manages shipping schedules, monitors shipment status in real-time, and using their extensive networks for competitive pricing, cost saving for their clients which also make the entire transportation management process easy and smooth. Effective transportation management means customer satisfaction. 

Reverse Logistics

Reverse logistics is the process of managing product return, recycling, and refurbishments. Companies often face problems when customers return goods, so after returning goods they are to be sent to manufacturers and this outsourced logistics provider helps businesses to manage return goods and also reduce costs and improve customer satisfaction. This service provider ensures that returned goods are processed properly.

Technology Integration

This service provider comes with advanced technological service offerings. So businesses can manage their transportation and warehouses properly by utilizing warehouse management systems(WMS), and transportation management systems(TMS) and ensure cloud-based platforms for seamless communication across supply chain procedures. 

Learn About Third-Party Logistics Challenges

This outsourced service provider faces so many difficulties in the fast-paced business landscape. Businesses face many challenges such as supply chain disruptions, goods shortages, and meeting customer expectations, and this service provider helps businesses overcome these challenges. By overcoming these challenges strategically, this service can improve its capabilities and provide value-added logistic service to its clients.

Supply Chain Disruptions

Businesses commonly encounter supply chain disruptions as an ongoing challenge. Such events include natural disasters and global pandemics; therefore, third-party logistics providers must have plans in place to quickly address such disruptions to avoid delays in deliveries and maximize delivery efficiency.

Cost Optimization Pressure

Cost optimization and rising operational costs are major concerns for this outsourced logistic provider. This service majorly faces problems in maintaining competitive pricing while maintaining profit margins for its clients. 

Customer Expectations

In an evolving business landscape, consumers’ expectations are increasing day by day. Aligning with customer expectations is a major concern for this service provider and they try to cope with increasingly high customer expectations such as real-time tracking, and transparent communication. Meeting such expectations as well as ensuring cost efficiency requires expertness and knowledge for this service provider.

Understanding and overcoming such challenges are essential for smooth logistic function and investments and development programs in advanced technology and smooth cross-border operations.  

Conclusions

We hope you get a clear understanding of third party logistics, its importance, functions, services, and challenges from this detailed article. This service plays a vital role in transportation management to warehouse facilities as well as value-added services. Overall this service streamlines business operations and logistic functions ultimately securing long-term success of the business and mitigating complexities of global logistics smoothly.

Contact One Union Solutions expert team to enhance your logistics and supply chain operation and streamline IT and telecom equipment import-export. Our service caters to industries like tech, medical, automotive, aviation and secures smooth operations in import-export, and improves customer satisfaction. 

Did You Know

The recently published report by Statista says that the global third party logistic market will reach $1.1 trillion by 2026 due to its demand for outsourced logistic solutions.

FAQ’s

1. What is A Third Party Logistic Provider or what is a 3PL?

Third party logistic providers or 3PLs are outsourced companies which help to streamline and optimize the supply chains more efficiently for businesses. It provide essential logistic services like order fulfilment, inventory management, transport & warehousing so businesses can focus on core activities while increasing efficiencies.

2. How can a 3PL provider assist my company?

Third party logistics (3PL) providers can save your business both time and money by managing essential logistics works more effectively than you ever could on your own, such as transportation, order fulfilment and warehousing. Their vast networks can offer cost-effective solutions that enhance delivery times while increasing customer satisfaction & helping your company scale more efficiently.

3. What services can third party logistic providers offer?

A Third party logistic providers offers a businesses with a host of services ranging from warehousing and inventory management to order fulfilment, transportation management, packaging management, & reverse logistic management, also technology integration for smoother supply chains and operations.

4. What are Challenges 3PL Providers Face?

3PL providers usually face numerous hurdles that hinder their operations, including natural disasters or pandemics affecting supply chains, rising operational costs, and meeting customer expectations of speed and transparency. To address these difficulties, providers invest in technology, adapt to market needs, and establish strong industry networks.

5. What separates 3PL from other logistics services like 1PL or 4PL?

One third-party logistics (PPL) provider handles operations independently while another manages them through partnerships with carriers; two PPL services operate jointly while three PPL providers oversee logistics independently while providing comprehensive services; four PPL providers go a step further by overseeing multiple PPL services as a single point of contact for their client base.