What is 3PL?

With both business and the economy changing at such a rapid rate, companies are often struggling to keep up with the ever-changing needs of their customers.

Businesses lucky enough to be experiencing growth can leave them facing the challenge of meeting the demands of their supply chain quickly and efficiently, whilst dealing with the internal struggles of space, storage, inventory and of course, staff.

This is where a Third Party Logistics (3PL) provider can provide much needed assistance.

3PL Definition:

Third Party Logistics, commonly abbreviated as 3PL, refers to a service utilised by businesses to outsource operational logistics from warehousing, all the way through to delivery. 

3PL encompasses a broad range of supply chain functions including all of the following services:

• Packaging
• Warehousing
• Picking and packing / Fulfilment
• Logistics and Delivery
• Reporting
• Reverse Logistics (Returns)
• Inventory Management
• Shipment Tracing and Tracking

An experienced 3PL provider will have a thorough knowledge of all of the above services and will be able to support you are your business, plus provide you the much needed flexibility and scalability you might require, whilst you can focus on your product and service.

What are the benefits of working with a 3PL

An Extended Team

We all know running a business can be a lonely place. Even with the closest of teams around you. Greater competition, smaller budgets, and increasing response rates can put even the most steadfast business owner under pressure. Finding the right 3PL service, and can provide that much needed sounding board, and team to rely on to get the job done.

Saves Time and Money

Utlising a 3PL provider allows you the ability to reduce costs, by cutting down your requirement to invest in additional warehousing, employment and staff costs, transportation and delivery, plus all the associated time and paperwork required. Along with the installation and management of costly IT systems which many 3PL’s already have in place. Leaving you being able to focus on your business’ core competency.

It Expands Your Reach

A 3PL provider has a network of partners including shipping carriers and other providers to ensure that you get the best services at the lowest rate possible.

Scalability and Flexibility

As businesses grow, scalability can be one of the biggest headaches. Whether its seasonal fluctuations, rapid expansion, or a one-off large project. 3PL’s can provide you the additional space and resource you need quickly and efficiently and can handle projects on an ongoing or singular basis. This gives businesses the flexibility to say yes, where they may previously turned work away.

Improving Customer Service

With the overhead costs of additional staff, warehousing, and technology reduced, or even eliminated, this allows you to focus on Customer service and allows you to allocate budget to business growth, keeping you at the forefront of your sector.

Experience

3PL providers are experts in their field. They will have the experience and resources required to deliver your project in an efficient, cost effective and timely manner. They will have the access to a vast network of resources to meet your needs, and the relationships to negotiate higher volume discounts and turnaround times.

It Reduces Your Risk. By outsourcing your company’s logistics, you don’t have to worry about things like staffing risk and the financial risk of investing in equipment and storage facilities.

So, when you should hire a 3PL provider?

1. You’re shipping more orders than you can cope with. Are you constantly battling with shipping orders, and struggling to keep up with returns?  As your company grows and your inventory increases, you’ll find yourself spending more time and energy fulfilling orders than actually focusing on your business.
2. You’ve run out of space. The ultimate aim for every business is to grow. And in some instances, this can happen quickly. This often means you are constantly moving things around and looking for storage space. If you’re nervous about investing in new premises or warehouse space. This is a perfect time to handover to 3PL.
3. You’re having premises problems. Is your tenancy coming up for renewal and you’re not sure whether to stay, or are your monthly costs increasing without giving you what you need? With the ever-increasing cost of business premises, hiring a 3PL provider will eliminate the need to hold stock and distribute from your place of business, giving you more flexibility and even allowing you to downsize your currently place of work.
4. Your delivery costs are sky high. One of the benefits of hiring a 3PL is their ability to be competitive with delivery rates and negotiate better terms. If you’re struggling with delivery, it might be time to bring in some help.
5. You’re planning for the future. Your sales are increasing and you are beginning to scale the business. Now is the time to have a discussion with a 3PL provider to have them on hand and prepared for when you need them.

What to look for when employing a 3PL provider

Like your business, many 3PL providers will have experience in particular sectors and specific needs. Have a clear idea of what you want them to achieve for you, and the parameters that you currently work to. However, a good 3PL provider may well be able to offer you other ways of doing things, whether it be from a packaging, fulfilment or logistics point of view.

Meet the team – think of them as an extended part of your business. It is imperative that you connect with and trust the team you will be working with, and you are comfortable that they understand the needs and challenges of your business.

Do they service your business locations – are your products sold mostly overseas or are your solely UK based? Choose a team that are experienced in the transportation of goods to your market locations.

Do they have the flexibility to scale with your business growth? For the majority of suppliers, of course they can, but if you are planning on entering new markets, or increasing your product lines, do they have the capacity to grow with you at the drop of a hat?

Will they go above and beyond? Chances are you won’t get to know this until a problem arises. However, talk to them about the relationships they have, and businesses they work for, this should give you a good grasp on whether they are for you.