3PL refers to outsourcing logistics to another company, including transportation, warehousing, supply chain management, and order fulfillment. It reduces costs and space requirements for businesses. The 3PL company manages the process and delivers goods to the end customer.
The term 3PL stands for Third Party Logistics. It refers to a process whereby one company’s logistics are outsourced and handled by another company. While the most commonly outsourced logistics activity is transportation, third-party logistics can include warehousing, supply chain management, and order fulfillment.
3PL Transport is extensively outsourced around the world. Most companies contract with government postal services, commercial carriers, and airlines to get goods from the manufacturing plant to the end customer. When the product is ready for shipment, the 3PL courier will collect the package and deliver it to the final customer. Shipping costs are then invoiced by the courier to the company. By hiring an outside firm that specializes in shipping and transportation, businesses are able to reduce overall costs since they don’t need to invest in trucks, planes, trains, or employees to transport goods.
Warehousing is another activity commonly outsourced to third-party logistics. For companies that want to spend the majority of their time on engineering, sales, and manufacturing, outsourcing warehousing can be a prudent move. The third-party logistics company will host raw components or finished goods until such time as the parts are needed for production or shipping. Typically, a notification is then sent to the third-party logistics company to deliver the goods. A third-party warehouse reduces the amount of space a business has to rent or own, and it also reduces the number of employees needed.
Supply chain management is the process companies use to manage their goods. This process often involves an automated ordering system where purchasing agents order material from suppliers and submit purchase orders for raw goods. For many businesses, this activity is outsourced to a third-party logistics company, and the purchasing professionals at the third-party logistics company actually manage the ordering process. The goods are then delivered when needed to the third party logistics warehouse or manufacturing plant.
Order fulfillment is the process of completing an order and delivering it to a customer. When using a third-party fulfillment company to handle order fulfillment, many companies simply provide a standalone ordering system or access to the 3PL company’s internal ordering system. When the orders are placed by the end customers, the 3PL company confirms the orders, picks the product from the warehouse, packs the product and schedules the shipment. Depending on the amount of outsourced logistics, the 3PL company may also be responsible for transportation to the end customer.
Protect your devices with Threat Protection by NordVPN
