What is 3PL (Third Party Logistics) And Its Significance

October 15 , 2021 | CATEGORY : SERVICES

3PL or third-party logistics allows businesses to save time, money and resources to focus on more strategic tasks

Modern supply chain solutions have become the key differentiator for businesses today. One major reason is that an effective and efficient logistics and supply chain management strategy to stand out from their competitors in today’s fast changing business environment.

Supply chain solutions affect costs, delivery, product and service quality, customer experience and ultimately, profitability. Businesses that organize streamline and manage their supply chains and logistics services benefit from lower direct and indirect costs. Supply chain management offers multiple benefits that translate to higher profits, greater competitive advantage and better brand image.

This is especially needed when increasing digital transactions and rise of ecommerce is driving unprecedented business model shifts. Consumers now expect fast, free shipping and competitive pricing.

Standing out from competition

In a highly competitive market scenario, robust and efficient logistics services enable businesses to standout from competition. For e-commerce, business efficiency at all operational levels is critical for success. Efficient logistics services help meet customers’ expectations of faster and efficient delivery of products.

The situation has led to the growth of 3PL or third-party logistics. Often used interchangeably with fulfillment warehouse or fulfillment centers, 3PL companies provide a host of services such as warehousing, picking and packing, transportation, inventory forecasting, order fulfillment, packaging and freight forwarding.

Companies that provide 3PL services offer many of the same services as order fulfillment companies. These services include: warehousing, inventory management, shipping and receiving, FTL and LTL freight shipping, picking and packing, kitting and customization, reverse logistics (returns), etc.

  • Advantages of 3PL:


  • There are several benefits that 3PL services offer:

Save on warehouse costs: Using 3PL services allows businesses the flexibility to increase or decrease the amount of shelf space required for the products. That flexibility can save considerable money.

Greater flexibility in product sourcing: Partnering a 3PL service provider allows businesses to source products from more than one manufacturer. All items are stored in the same warehouse, so orders that include products from multiple suppliers can be shipped in the same box which translates into savings on shipping costs.

Handling by professionals: The orders are processed by professionals who specialize in top-notch order fulfillment.

Faster delivery and lower shipping costs: Outsourcing order fulfillment ensures faster delivery and lower shipping costs.

Save money on shipping: Fulfillment warehouses are volume shippers and often enjoy reduced shipping prices with major carriers. Having a 3PL partner can help businesses save money on shipping.

Value-added services: Partnering a 3PL service provider allows businesses to gain access to additional services such as kitting, customization, etc.

Easier returns processing: A 3PL partner can handle returns (reverse logistics) as well as shipping which translates into time saved. The 3PL partner can provide customer service and seamlessly process any returns. This improves customer satisfaction and allows businesses to put products back into inventory quickly.

Leverage expertise: Having a 3PL logistics provider can help businesses choose the best packaging, shipping, and inventory management options.

Focus on core business: Outsourcing logistics services to a 3PL partner allows businesses to focus on the core business objectives. The effort and energy saved can be invested by the businesses to expand marketing and increase sales.

More control over logistics services: Businesses get to choose an order fulfillment partner that provides the services that their customers expect.

Businesses can gain a multitude of benefits by partnering 3PL service providers. 3PL offers businesses an all-in-one solution for assembly, packaging, warehousing, and distribution. Utilizing the services of 3PL partner enables businesses with seamless and efficient logistics that helps them maximize profitability.