Third-party logistics companies or 3PLs can be your solution to order fulfillment and inventory management. With the help of experienced professionals with an intricate knowledge of the fulfillment industry, you can focus on growing your business and keeping your customers happy. Still, you need to understand what a 3PL is and what it can do for your business.
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As a small business owner, you know how taxing it can be to handle all business operations in-house, especially if you provide e-commerce sales. Managing your inventory, picking goods for customers, and sending off packages takes a lot of work. If business is booming, fulfilling online orders can take away from other aspects of your business.
As one of the best third-party logistics companies serving small and medium-sized businesses, our Streamline Fulfillment team is here to explain what you should know about working with a 3PL, including the service’s benefits.
What Is Third-Party Logistics?
Third-party logistics refers to the outsourcing of picking, packing, and shipping goods to consumers. These companies will hold some of your business’s stock in safe and secure warehouses where a team will pick and pack orders accurately and ship them to your customers.
Working with third-party logistics companies provides an essential link between your business and your customers. Aside from fulfilling orders, a 3PL service provider may also handle additional services like freight forwarding, returns or reverse logistics, and kitting, which involves combining multiple products to create special kits for consumers.
A 3PL services company may specialize in different types of warehousing and fulfillment according to their clients’ needs. Some companies have warehouses with refrigeration to store and ship perishable items, or they may have the expertise to handle, store, and ship hazardous materials.
A 3PL will perfectly match trucking companies with shippers to move their freight quickly and efficiently to ensure goods reach customers safely and on time. As such, an order fulfillment company will offer comprehensive supply chain services like:
- LTL (Less-Than-Truckload): This shipping option is for small freight that won’t take up a whole trailer.
- Warehousing: 3PL service providers will receive your inventory and store it securely in one of their warehouses for order fulfillment.
- Supply Chain Management: Third-party logistics companies will ensure the safe shipment of their clients’ goods to consumers using a reliable network of freight carriers.
- Truckload Brokerage: A truckload or freight brokerage is a link between a carrier that can move freight and a shipper with freight to move. Instead of operating their own trucks, a truckload broker will coordinate shipments within their network of reliable freight carriers.
- Intermodal Marketing Company: Many 3PL service providers are intermodal marketing companies that move goods using multiple modes of transportation for seamless shipping solutions.
- Distribution and Fulfillment: These companies also process their clients’ orders and ship them directly to customers.
When you work with a 3PL service provider, you won’t have to rent a warehouse, hire truckers, or manage the shipment of your goods to customers. As an efficient middleman, the 3PL handles everything involving order fulfillment.
Most third-party logistics companies have multiple warehouses in convenient locations and a network of trucking companies. Sometimes, they have a fleet to provide end-to-end logistic services. Here’s a closer look at how a 3PL works.
Receiving Client Goods
The first step in working with a 3PL is sending the company a selection of your inventory. When the 3PL warehouse receives your items, they’ll carefully catalog and store them within the portion of the warehouse you rent. Every third-party logistics company has its own processes for receiving client goods.
When a 3PL warehouse gets your inventory, every item will receive a unique SKU barcode and number before workers store it in the section of the warehouse for your company. Goods may go on a shelf, on a pallet, or inside a bin.
Picking Customer Items
If someone orders something from your business, you will manually upload the orders to the 3PL service provider’s system. Some companies streamline this process using advanced technology like integrated software. Still, the company must receive the order details, customer name, shipment location, and other essential information.
The warehouse team will receive the order and pick the items from your inventory accurately. They’ll use a list with the order details and your company’s inventory location in the warehouse to ensure they source the right items for the order.
A warehouse worker will carefully pack everything after picking all the goods for an order. As a client of a third-party logistics company, you can choose how the warehouse will pick your orders, which may include using:
- Polly bags
- Dunnage or filler material
- Bubble packages
- Unbranded boxes
Depending on the type of 3PL you work with, you may have to pay for packing materials separately or as part of the company’s fulfillment management services. However, you can rely on the warehouse team to select the best packing materials to safely ship your goods in a single shipment with little to no risk of damage during transport.
After neatly packing an order, the 3PL warehouse worker will prepare the box or package for shipping. They’ll buy and print shipping labels so you don’t have to worry about that step. A 3PL service provider may have a network of trusted carriers, or they might help you find the best price for the customer’s preferred delivery speed.
Examples of reputable 3PL carriers include USPS, DHL, and UPS.
Sometimes, customers do not like or want the items they order, or they might be defective in some way. Comprehensive 3PL services often include reverse logistics to manage returns.
Unsatisfied customers can send items back to the 3PL warehouse, where workers will process the order. The crew may restock the items or dispose of them if you can’t resell them.
Asset-Based vs. Non-Asset-Based Services
Any 3PL company you work with should be an asset to your business. Although the company has no obligation to own assets, they can still provide services.
An asset-based provider is usually a trucking company with its own freight trucks, drivers, and warehouses. Since asset-based providers have trucks, they can usually accommodate LTL and complete truckload options. They also concentrate on freight transportation.
If you choose a non-asset-based provider, you’re picking a company that works with a network of trucking services without owning a fleet. It also won’t have truckers on its payroll or own the physical equipment they use to carry out daily operations. However, they can provide many supply chain solutions, making them a good option for small businesses.
A 3PL provider could be an asset-based or non-asset-based company, depending on their services. In many cases, these companies are non-asset-based, but it’s not uncommon for a 3PL service provider to own its warehouse or fleet to provide e-commerce fulfillment.
What’s the Difference Between a 3PL and a Freight Brokerage?
You might consider working with a freight broker if you need an efficient way to get your products to customers. Freight brokers and 3PLs are the same to a degree. Both types of service providers help clients outsource their order fulfillment needs, but not every 3PL brokers freight.
The primary service of a freight broker is truckload brokerage, but a 3PL offers more supply chain solutions besides truckload brokerage.
Benefits of Working With Third-Party Logistics Companies
You might wonder if outsourcing your order fulfillment through a 3PL is worthwhile. The short answer is yes. Third-party logistics companies aren’t all the same, but the best ones offer quality solutions for inventory management, picking, packing, and shipping with outstanding benefits.
Hiring a third-party logistics company is beneficial for many small and medium-sized businesses that sell products with many rules and regulations, like wine, alcohol, hazmat materials, and cold storage items. Though your business might not be able to store this type of inventory, you can send inventory to a 3PL specializing in accommodating specific regulations.
Time and Money Savings
By outsourcing your fulfillment needs, you won’t have to spend money on technology, a warehouse, extra employees, or a fleet. You’ll save time and money by letting a 3PL handle the fine details of order fulfillment and shipping.
Accuracy and Efficiency
When people place orders with an e-commerce business, they expect to receive their purchase quickly and on time. Fortunately, many 3PLs understand the need for speed and efficiency, which is why they build an infrastructure capable of getting items out fast. These service providers use technology and software to keep track of inventory, automate tasks, and provide outstanding services with desirable results.
Find Quality 3PL Solutions With Streamline Fulfillment
Don’t waste precious time looking for third-party logistics companies. Instead, put your trust in Streamline Fulfillment.
With our unique business model, we can tailor our 3PL services to meet the needs and exceed the expectations of small and medium-sized businesses. Our dedicated team takes the guesswork out of the fulfillment and shipping processes to make it easier for you to connect with customers throughout the nation.
Start saving time and money by scheduling a consultation with Streamline Fulfillment at (509) 888-2880.