A Quick Guide to 3PL Providers

What is a 3PL? 3PL, or third-party logistics, refers to the supply chain integration of warehousing operations and transportation services. Why do companies outsource to 3PLs?

1) Companies who are growing and wish to scale their business without investments into additional warehouse space, technology, labor, training, and equipment required find 3PLs provide value-added services thus reducing costs, optimizing processes, increasing productivity, and saving time.

2) Business owners find that outsourcing these business processes allow them to focus on strategic initiatives such as product development, marketing, and sales.

3) 3PLs coordinate all aspects of the supply chain allowing for more informed decisions about supply and demand.

How does the 3PL order fulfillment process work?

1) Acceptance of inventory, inventory storage by SKU

2) Orders received through integrated EDI

3) Order fulfillment by warehouse picking teams

4) Packing and shipping label printing

5) Shipping

What costs are involved? Some of the most common costs include:

1) Onboarding

2) Inventory receiving and storage

3) Order pick-and-pack

4) Packaging

5) Shipping

How do you measure the performance of your 3PL?

Looking at various KPIs can help you to measure your 3PLs performance. For example, the rate of returns due to damage occurring in shipping and on-time deliveries. Constantly monitoring key performance indicators and communicating with your 3PL is important to increase efficiency, eliminate issues, and build a strong partnership. Partnering with a reliable 3PL is often the best solution for your growing business. Leveraging the expertise of a 3PL can eliminate the costs of the learning phase. Voicing your concerns to a potential 3PL will allow you to choose the right 3PL who you trust to handle your inventory.