Topic: News

The Complete Guide to 3PL and the Right Reasons to Outsource Your Logistics

Mar 23, 2022 3:06:07 PM

Introduction: What is a 3PL?

3PL stands for third-party logistics. Third-party logistics in logistics and supply chain management is an organisation's use of third-party businesses to outsource elements of its distribution, warehousing, and fulfilment services.

3PL companies specialise in integrated warehouse and transportation operations that can be scaled and changed to customers' needs based on market conditions to fulfil demand and delivery service requirements for their products. Using a 3PL service frees up your time while also lowering the risk of in-house fulfilment problems.

The term “third party logistics” became popular in the 1970s and 1980s as more companies opted to outsource their fulfilment procedures to third-party companies. The demand for customised fulfilment providers has expanded in line with the growth of e-commerce, especially the sheer variety of enterprises that exist today.

3PL Processes Explained & Why You Need One

3PL companies offer insight into the problems that arise while delivering domestically and overseas. These problems include customs, required documentation, duties, and shipping regulations. Working with a third-party logistics company can also help you avoid the stress of having to follow international shipping regulations.

DRIVE COST SAVINGS

IMPROVE CUSTOMER SATISFACTION

FOCUS ON CORE COMPETENCIES

GET ACCESS TO EXPERTISE AND EXPERIENCE

GAIN FLEXIBILITY AND SCALABILITY

ENABLE BUSINESS GROWTH AND MARKET EXPANSION

 

Pitfalls of Using 3PL Firms

Despite the potential rewards, using third- party logistics companies can come with its own set of risks.

  • Lack of communication - The importance of carriers and transportation providers in supply chain operations is crucial. However, their significance is sometimes neglected at the operational level. The supply chain's seamless operation is harmed by a lack of cooperation.
  • Government Regulations - The majority of 3PL companies deliver items across many cities, states, and even nations. As a result, they must follow the norms and regulations of each of these regions. Government requirements differ from one country to the next, and 3PL firms must stay current and compliant with all of them to stay in business. This is difficult, since many 3PLs lack adequate resources to manage and keep track of the constantly changing rules.
  • Rising fuel costs - Fuel prices are growing for all organisations with delivery operations. Petrol prices make up a significant portion of many businesses’ operational expenditures, and high fuel costs can quickly eat into a company's revenue.

 

The main functions of 3PL

Global shipping

Customs, freight forwarding, and consolidation are just a few of the worldwide shipping logistics factors that a 3PL can manage, saving you time and money.

Transportation

Working with a 3PL can help you reduce transportation costs, increase efficiencies, and develop solutions for complicated supply chain issues. 3Pls can often give you basic tracking for your products.

Info and comms technonology

To manage ecommerce, client connections, transportation, and warehouse operations, a 3PL often uses standard information technology. The tools most trusted by 3PLs are electronic data interchange (EDI), application programming interface (API), and cloud-based systems.

 

Conclusion: Why Hiring A Third Party Logistics Provider Is The Best Decision For Your Business!

Customers strategic requirements to move, store, and fulfil items and materials can be scaled and customised by a 3PL to match their demands. When a company's supply chain grows too complex to manage internally, they turn to third-party logistics companies. For example, as a company grows through mergers and acquisitions, a supply chain that was once manageable outgrows in-house abilities, therefore their next step in the business would be to use 3PL services.  

 

3PL vs 4PL

 

3PL V 4PL

Fourth-party logistics (4PL) providers assume many of the same roles as 3PLs but have much broader responsibility and accountability in helping the customer reach its strategic goals. 4PLs use their high level of visibility, real-time information, communication abilities and broad knowledge to align 3PLs, customers and service providers. 

3PLs are more focused on one-off transactions, while 4PLs offer a greater degree of logistics services for excellent value.

1

A 3PL company most often owns its own warehousing or transportation assets, while a 4PL company is non- asset based meaning they can focus their energy on innovative supply chain solutions.

 

2

3PL focuses on day-to-day operations while 4PL focuses on optimising the entire supply chain.

3

A 3pl has one of many points of contact in the supply chain while a 4PL is a single point of contact for the entire supply chain.

 

With the proper infrastructure, transportation, and dedicated expertise and solutions, 3PLs can be beneficial to an enterprise, no matter the industry, the size, or the company location. The question, however, is whether it makes sense to use a 3PL compared to a 4PL.

Some companies may have internal resources and expertise and will never need one. Others are going to find that a 3PL – or a 4PL, for that matter – can ease their logistics and fulfilment worries and become a partner in improving their brand and market presence in the long run.

 

At Titan, all our products, processes and technology are underpinned by our 4PL and 5PL service model.

This model leverages our global network of strategic carriers, vastly experienced logistics subject matter experts, and advanced technology platform that includes integrated carriers, control tower and data analytics.

Chat with our team today to see how we can support your business.

Ready to see how Titan Solutions can support your business?

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