What is a Third-party Logistics Provider?

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 supply chain by outsourcing logistic services. This service provider is an important factor in your business. Businesses which 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 save 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 which 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. 

What is Third Party Logistics

This service is an outsourced partner which offers a wide range of supply chain management and logistic service, eCommerce fulfillment service, and generates intermediate links between end customer and manufacturing operations. When order fulfillment and various management services run seamlessly in a company that means customers are happy for 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 to focus on their core operations and handle order distribution, order fulfillment, 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 and 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 which are seeking 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. This service operates as an independent service that’s why they provide specific services to multiple clients from other global import-export-supplier and manufacturing industries.

However, there is first party logistics which operate as an in-house logistic activities 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. While both 3PL and 4PL provide seamless logistic and supply chain management service. 4PL services have access over 3PL service they can arrange 3PL service to their clients. 

Functions and Services Offered by Third Party Logistics Provider

This service provider offers a wide range of services from value-added service to transportation management, warehouse management. By outsourcing this service this offers many aspects to supply chain efficiency by decreasing costs, and enhancing overall performance.

Here are the lists of some key functions and services of this service:

Warehouse Management

Warehouse management is one of the important services offered by this service. 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 streamline storage space in warehouses, and also help 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 resulted 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, labeling when they are ready for transportation. 

Inventory Management

This Outsourced logistic provider helps businesses to manage inventory levels because this service is equipped with inventory management systems which help businesses to track goods movement in transit, to monitor goods stock level 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 inventory stock available or not. Such leverages by this service help businesses to prevent product stockout and overstock during high demand season and this accelerate smooth flow of supply chain operations.

Transportation Management

This outsourced logistic provider takes charge of transportation management making it a seamless, structured management system.  Usually transportation management system help to coordinate and organize the movement of goods from the point of its production to its original destination but this entire process face many difficulties which lead to disruption to this process and this service provider managing shipping schedules, monitor 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, refurbishments. Companies often face problems when customers return goods so after returning goods need 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 return goods are processed properly and decreases overall costs. 

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), transportation management systems(TMS) and ensure cloud-based platforms for seamless communication across supply chain procedures. 

Challenges Faced by Third-Party Logistics

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

Supply Chain Disruptions

Supply chain disruptions is one of the prominent problems faced by businesses. Supply chain disruption happened due to many reasons such as natural disasters, global pandemics, and third party logistics providers must have enforced strategic plans to respond quickly to address such disruptions and minimize delays in deliveries. 

Environmental Sustainability Concerns

 This service provider faces pressure to adopt eco-friendly sustainable practices. This includes developing transportation routes so that vehicles that carry goods decrease less carbon emissions and putting in place eco-friendly packaging techniques. Such Activities must be adopted by these service providers because these not only create a greate image of society expectations but also improve the company’s reputation around the global market. 

Cost Optimization Pressure

Cost optimization and rising operational cost are major concerns for this outsource logistic provider. This service majorly faces problems to maintain competitive pricing while maintaining profit margin to their 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 up with increasingly high customer expectations such as real-time tracking, transparent communication. Meeting such expectations as well 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 about third party logistics, its importance, functions, services and challenges from this detailed article and this service plays a vital role from transportation management to warehouse facilities as well as value added services. Overall this service streamline business operations and logistic functions and ultimately securing long-term success of business also mitigate complexities of global logistics smoothly.

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