What is 3PL Logistics?
The term 3PL stands for third party logistics. It is a process that refers to the outsourcing of supply chain functions and logistics functions to a third-party provider. When one engages in a product manufacturing business, the process of shipping logistics becomes vital. There are many businesses that have ties with contract warehousing, commercial carriers, government postal services and various airlines to get their products shipped from the manufacturing facility all the way to the end customer. However, when the product is ready to ship, the 3PL logistics collect the package and conveniently deliver it to the end customer. The total shipping costs is billed by the service carrier to the business handling department. The third party logistics specializes in transportation and shipping, in turn saving the overall costs of the business and their need to invest in trucks, planes or employees to transport the goods or packages.
In brief, 3PL is a platform in logistics that manages and outsources goods of one company to another company. In the international business market, companies offering third-party logistics have gained a lot of popularity. They are becoming dominant in the field of supply chain management. The support and services that is provided by a third-party company normally include consolidation services, freight, delivery of freight and warehousing and distribution. 3PL services offer logistics solutions to domestic as well as international transactions.
Contract warehousing or also widely known as warehousing and distribution is another method that conveniently outsources to third party logistics. This facility is useful for those businesses that want to efficiently devote their time and efforts to other important priorities like sales, manufacturing and designing of the products. Basically, a third-party warehousing service reduces the number of employees needed and also the amount of space needed for a business to function smoothly.
Advantages of 3PL Logistics
The main advantage of 3PL system is the transportation of goods and products along the supply chain. This logistics includes the proper shipping of items along with handling of paperwork that is related with the shipments.
Another advantage is the concept of third-party outsourcing. When a company hires another logistics organization to manage the shipping and distribution part of the business, the company saves its costs on many aspects. It also improves the quality of the products that are designed and manufactured. Most of the companies believe that 3PL service providers offer quality supply chain services instead of running some functions internally.
3PL logistics system brings many other advantages like less manpower and fewer business headaches. Having a self-business and being an owner of a company, one needs to do everything possible to ensure the profit margin remains intact and profitable. Third-party logistics definitely scrutinizes every problem and provides a solution to everyone’s needs.