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What Do You Do When Your Focus is on Making Products, Not Moving Them?

There are instances and situations when a business is not able to carry out the logistics and supply chain management functions. A third party logistics (3PL) can help out in these situations.

What is 3PL? It is a service that is provided by an external company to provide distribution and fulfillment of the products on behalf of the company.

Startups and growing companies are more likely to need 3PL services. But even big companies looking for convenience and those that want to avoid the hassle of logistics can use 3PL services.

There are many reasons that a company may decide to use 3PL. One of the reasons is lack of warehousing facilities. A company without warehousing may still need storage; they can choose 3PL warehousing for their products.

Also, growing companies may be faced with transportation problems, or struggle with up-front investment in vehicles and transport equipment. What is 3PL? It is a solution to these problems.

Companies that want to expand into other markets also find 3PL services very useful, as they can send their products to places where they have not built any networks yet. Most of the ecommerce providers need 3PL services, especially those that provide drop-shipment services.

What is 3PL? Here are a few questions and answers that will help explain this concept:

  • What are logistics providers? A logistics provider is a company that provides the management of flow of goods and materials from the point of origin all the way to the end user. Logistics providers handle shipping, warehousing, transportation, packaging, security, and inventory. A 3PL is a logistics service provider.
  • What is the difference between 3PL and 4PL? A 3PL provides outsourced logistics services to a company, and may include part or all of the supply chain management services of the company. The services offered by a 3PL include warehousing, inventory, order packing and fulfillment, transportation and shipping coordination, order tracking and status communication, customer service, picking, cross docking, IT solutions, freight forwarding, returns processing, and reverse logistics, among other supply chain management services.

4PL (fourth party logistics) services, on the other hand, perform all the functions of 3PLs—but also offer consulting services, management of technology, resources and infrastructure, logistics strategy, business planning, project management, change management, and so much more. With a 4PL, the company benefits from strategic advice in addition to operational support.

  • How much does a 3PL cost? Each 3PL companies will price their services differently. There are no real set standard prices for 3PLs, and therefore you will find that the prices range and differ greatly from one company to the other. It is easy, however, to find a company that will offer you good value for your money, if you take time to calculate how the expense will affect your production costs and the pricing of your product.

For most of the companies, you will find that there are both fixed and variable costs, depending on the services that you utilize. Hiring a great 3PL comes with a lot of peace of mind, allowing you to concentrate on the growth of your company.