Third-party logistics (3PL) are quickly becoming an unavoidable part of eCommerce fulfillment. 3PL logistics companies are catering to a lot of global businesses around the world, shipping their products to all corners of the world. Different retail and production companies are hiring these 3PLs as a way of maintaining their inventory and widening their service area.
Among the core competencies of what third party logistics services providers can offer, we can include things such as warehousing and distribution, as well as inventory administration. Many 3PL providers also offer various product maintenance services, last-mile services, and reverse logistics. But more than just 3PL warehousing and fulfillment, logistics providers offer other types of functions too.
What is a 3PL Logistics Company?
A third-party logistics company is an organization that helps smooth out the supply chain process. They will handle all aspects of a distribution network, going from the manufacturer or retailer, all the way to the end-user. This will include everything from logistics and transportation management, fulfillment services, inventory management, shipping audits, customs brokerage, shipping, and delivery monitoring, etc.
That said, not all 3PLs are created equal. While some will focus on only certain sections of the supply chain, others may take a more comprehensive approach, offering a full-service package. You may have a 3PL company offering domestic and global transport alongside customer brokerage services, while others will provide you with omnichannel planning alternatives.
That said, here are some of the common services that 3PL providers will offer.
Transportation is among the most common logistics operations you’ll find being offered. This represents the movement of goods, services, people, and animals from one place to the point of consumption. Transportation services also deal with different modes of transport such as road, rail, air, freight, sea, etc. In addition, efficient transportation will require route optimization, goods safety, etc.
Transportation services will include domestic freight, overseas shipping, and import/export logistics. Since eCommerce fulfillment oftentimes involves global shipping, logistics providers need to know how to comply with international trade guidelines. Be it domestic or overseas, importing goods will typically require cross-docking support. A professional logistics company will typically provide cross-docking capabilities and distribute the goods to their final destination without needing to store them.
There are different types of 3PL organizations out there, each providing their own set of services. But like with transportation, most will offer warehousing capabilities. Taking advantage of a 3PL warehouse is one of the main benefits and reasons that most organizations work with logistics providers in the first place. Aside from the storage space itself, warehousing also implies special machinery and equipment, as well as dedicated personnel to operate them.
Warehousing services can differ from one third party logistics company to the next. That said, here are some of the most common:
- General Warehousing – this includes all non-perishable products that don’t require any special storage conditions.
- Bonded Warehousing – this refers to a secured warehouse, covered by customs rules and regulations. Also, the goods are backed by a bond in case of any monetary loss.
- Cold Storage – Created for perishable products that need to be kept fresh in temperature-controlled environments.
- Pharmaceutical Warehousing – Similar to cold storage, pharmaceutical warehousing is climate-controlled. In addition, these warehouses prevent contamination and meet certain regulations.
Another service offered by third-party logistics providers includes state-of-the-art technologies needed for effective supply chain management. Among these, we can mention transportation management systems (TMS), logistics management, inventory management, freight control, and monitoring, etc. All of these software work to boost your supply chain visibility, lower costs, streamline operations, and improve customer experience.
While most of the transportation happens over air, freight, rail, and sea, these tend to stop once the goods reach a fulfillment center. From here, they need to be delivered to their final destination. This last portion of the delivery process is what’s known as the last mile. Incidentally, this is also the most expensive part of the entire supply chain, making up roughly a third of all costs.
With the rise of eCommerce, last-mile services have become more important than ever. Customers today expect a speedy or, in some cases, same-day delivery. But this is easier said than done. There are plenty of challenges facing this final stretch of the journey, such as inefficient routes, bad weather, or even natural disasters. Experienced 3PLs will know how to leverage their technologies for route optimization, warehousing, and fulfillment of orders.
What’s really important about last-mile logistics services is that they represent the face that most customers see of a retailer or manufacturer. As such, this service can make or break a company’s customer experience.
Reverse Logistics Services
Reverse logistics, as its name would suggest, represents the movement of goods in reverse to the point of origin. They start from the end-user and find their way back to the retailer, manufacturer, or, in some cases, as raw materials for recycling. Reverse logistics refers to goods that have been returned by customers for one reason or another.
Like with last-mile services, reverse logistics plays a crucial role in customer satisfaction and can make your supply chain system move faster and be more cost-effective. There are additional benefits to be had from reverse logistics. Among these, we can include better supply chain visibility and transparency, a secondary income, better product performance tracking throughout its entire life cycle, eco-friendly benefits, etc.
Final-Stage Kitting and Packaging
Some third-party logistics providers can go one step beyond the standard logistics, warehousing, and distribution, providing additional value-added services. Every retailer has customized preferences in terms of how they want their products to be packaged, stored, and delivered. 3PLs come into play here by providing kitting and packaging.
This will allow warehouses and distribution centers to implement different postponement strategies around specific order volumes. While you send out your orders in bulk, the 3PL will pick and pack them according to your preferences.