How Does Third-Party Logistics Work?

Nowadays, many firms are worried about their supply chain management. They focus more on sending the product to the customer on time rather than on marketing, sales, and product development. If you need help with supply chain management, one of the best solutions is third-party logistics or 3pls solutions. 

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It is quite understandable that when running a business, it is more costly to manage the supply chain as it requires more time, space, workforce, oversight, coordination, and monetary investment. So, let's check whether 3pl can be the right option for your business and how to select the best 3pl company. 

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A Brief Introduction To 3PL Solutions

First, let's start with understanding – "what are 3pl services." 3PL or third-party logistics services are used to outsource supply chain management and logistics functions to a specialized service provider. These service providers can be a division within a large firm or a standalone company that has specialization in supply chain management and logistics. The main aim of introducing 3PL services is to optimize and streamline the supply chain management process and outsource the transportation and logistics of the products. 

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It allows businesses to stay attentive and focused on their core competencies. A broad range of activities is involved in 3pl services, including warehousing, transportation, order fulfillment, inventory management, and distribution. The service provider manages and executes these activities on behalf of the client firm. 

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It includes the physical movement of goods, associated documentation, paperwork, and compliance requirements. The 3PL services provide significant benefits to all sizes of businesses and industries. Outsourcing supply chain management and logistics functions to specialized service providers can help businesses to increase efficiency, reduce costs, and pay attention to core competencies, which results in increased business growth and profitability. 

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Related: Top 3PL Companies Near Me For Fast, Efficient Shipping

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What Is The Use Of 3PL Services?

In recent past years, the use of 3pl services has gained more popularity because businesses seek to optimize and streamline their supply chain management processes. Many companies prefer to use 3pl method within their business because of many common reasons, including;

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Outsourcing Transportation

Many firms look for a 3pl provider to outsource their transportation needs. It includes trucking, shipping, and air freight services. Outsourcing transportation can help your business to improve efficiency and reduce costs. Here, 3PL providers can optimize shipping schedules and routes and have access to better rates.

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Inventory Management

Another use of 3pl services is for inventory management, which includes different services like optimizing reorder points, forecasting and tracking inventory levels, and managing stock levels across different locations. It can help businesses to improve order fulfillment rates and reduce waste. 

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Warehousing And Distribution

Many companies prefer to use 3pl services for outsourcing warehousing and distribution. A wide range of warehousing solutions is offered by 3pl logistics companies, which may range from basic storage to advanced order fulfillment services and inventory management. If you outsource these functions, you can free up resources and valuable space and pay attention to different aspects of their operations. 

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International Logistics

The third-party logistics 3pl service providers can provide specialized international logistics services like compliance management, customs clearance, and freight forwarding that can help businesses operate globally. It can help your business to expand operations into new markets by navigating the global trade complexities. 

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eCommerce Fulfillment

Many businesses are switching to 3pl providers because of the growing eCommerce platforms. The 3pl providers are considered to help handle your online order fulfillment requirements. You can expect to get specialized eCommerce fulfillment services like returns processing, pick-and-pack, and kitting to help your businesses to meet your online customer's needs. 

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Who Can Use The 3PL Solutions? 

The 3pls solutions are helpful for all sizes of businesses that meet the company's supply chain needs and coordination. It has been identified that many merchants, brands, and retailers are turning to 3pls to outsource their requirements for supply chain management like warehousing and distribution. A business can grow its productivity by meeting its customer's needs, as 3pl offers all the essential services. Here is the list of the companies that can best utilize the 3pl services.

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Large Fortune 500 companies: Research shows that the 3pl is used by nearly 90% of Fortune 500 companies.

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Small eCommerce businesses: Small eCommerce businesses can use 3pl services and save money on other necessities. 

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Medium-sized companies: The 3PL is better utilized by medium-sized companies to increase order volume and meet demand.

Many companies are selling their products effectively by using 3PLs services, which may include nutraceuticals, bulk goods, wine and spirits, pet accessories, raw materials, cosmetics, electronics, general merchandise, apparel, and many more. 

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Critical Benefits Of 3PL For Businesses

A broad range of critical benefits is associated with third-party logistics companies that help all sizes of industries and businesses. Here is the list of benefits that you can get by integrating 3pl services within your business. 

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Improved Scalability And Flexibility

Using 3pl services is helpful for your business as it offers greater scalability and flexibility. It has been identified that when a business evolves and grows, its logistics requirements may change. Thus, 3pl services can help the company adapt to the new changes and provide customized solutions to meet the client's changing needs. It may include removing or adding services as required or scaling down or up to meet the fluctuating demand. 

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Cost Savings

The 3pl services can reduce costs. Your business can outsource supply chain management and logistic functions and gain economies of scale. This is because 3PL providers have access to better rates on warehousing, transportation, and other services. Moreover, 3PL providers are also helpful for your business to optimize processes, reduce waste, increase efficiency, and reduce costs. 

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Pay Attention To Core Competencies

It has been identified that outsourcing supply chain management and logistics can pay attention to critical areas of expertise and their core competencies. It can help your business drive growth and stay competitive in the market as they allocate different resources to areas by identifying a competitive advantage rather than focusing on outside their core competencies. 

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Specialized And Expertise Knowledge

Another critical benefit of third-party logistics 3pl services is the specialized and expert knowledge. These service providers offer customized solutions to meet clients' needs using their in-depth supply chain management and logistics knowledge. Their expertise level can help your business reduce inefficiencies and optimize the supply chain process, which results in increased business growth and profitability. 

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Access To Advanced Tools And Technology 

3pl services are helpful for your business as they have access to advanced tools and technology to improve their logistics and supply chain management process. It may include transportation management systems, warehouse management systems, and other hardware and software tools. It has been identified that leveraging these tools can help businesses to reduce inefficiencies and costs and optimize their supply chain processes. 

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Improved Customer Service

A business can also enhance its customer service with the support of 3pl services. Hence, your business can improve customer loyalty and satisfaction by providing more efficient and faster order delivery and fulfillment. Moreover, 3pl service providers can provide customized solutions to meet the specific requirement of various customer segments, enhancing customer service. 

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After knowing what a 3PL does for your business, let's understand how to select the right 3pl company. 

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Tips For Choosing The Best 3PL Company

If you are looking for a valuable partner for your business to look after outsourcing the supply chain management, 3pl service providers are the best solution. As you may find many options for 3pl service providers, you might need help finding the right one. So, here are the important tips for choosing the right 3pl company for your business. 

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Assess Their Technology

Technology plays a crucial role in the logistic function and supply chain management. Thus, you must hire a 3pl service provider who helps you to manage your logistics efficiently with the latest technology. 

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Define Your Business Needs

Understanding your logistics needs before finalizing anything with the 3pl provider is essential. You need to consider the selling product type, your company's size, shipping destinations, and your order volume. 

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Check The Provider's Experience

You must consider a 3pl service provider who has experience in the industry. You may ask the service provider for some case studies and references that they have served before. Moreover, you may also ask for a proven track record before committing to them. 

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You must also evaluate their network and check their customer service to run your business smoothly. 

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Conclusion

Ultimately, third-party logistics offers great potential for reducing costs and streamlining operations for a variety of businesses. From increasing automation to providing comprehensive insights into the supply chain, 3PL is transforming how goods are moved — making it easier and more efficient. With years of expertise and resources at their disposal, 3PL providers like Simpl can provide you with the one-on-one guidance needed to transform your logistics operations. Not only that, but they also offer specialized services ranging from warehouse management to alternative delivery methods — allowing you to tailor your shipments so that they meet customer requirements every time. So if you’re looking for a reliable 3PL provider capable of handling your logistics needs, get in touch with Simpl today and see what kind of success you can achieve by working with them!

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Recommended: How to Start a Third-Party Logistics Company