How can third-party logistics (3PL) improve your supply chain?

Nowadays, when it comes to businesses moving their goods through their internal systems, disruption seems to be the new normal. Events like a pandemic, trade sanctions, and war can seriously affect this supply chain, creating problems for internal logistics, and ultimately, the delivery of goods. To avoid this, companies should be thinking of ways to overcome these obstacles, putting strategies in place to ensure the smooth running of their supply chains.

A good solution to these problems is third-party logistics (3PL) software.

In this article, we’ll take a deep dive into 3PL and show how partnering with a 3PL company can streamline your business and make it more efficient.

What is 3PL?

There’s 1PL, 2PL, and 3PL, and PL stands for party logistics. The first, 1PL, describes  a business that directly delivers its orders to its customers. The second, 2PL, means that a business hires an outside courier service to deliver goods to customers.

In 3PL, a business outsources its supply chain management to a third party. This could include everything from internal logistics to order fulfillment, or any aspect of it.

3PL services you can use include:

• Warehousing,
• Transportation,
• Picking up,
• Packing, and
• Last-mile delivery.

You can choose the services offered by 3PL according to your needs. However, since 3PL providers focus totally on logistics, using their expertise to streamline your internal processing and order fulfillment can only improve your supply chain.

How does 3PL work?

Well, that depends on which services you use. But as an overview, this is how a typical 3PL arrangement works:

• Your entire inventory is stored at a 3PL warehouse. Here, SKU numbers are assigned to your items for easy identification, and they are separated into designated bins.
• When a customer places an order with you, it’s forwarded to the 3PL company for  fulfillment. To make it even easier, modern order management software will  automatically send the order to the 3PL provider’s warehouse. You don’t have to do anything.
• At the warehouse, a team breaks down your customer’s order, identifies the storage location for each item, and retrieves them.
• When all the necessary items have been collected, they are packed in a delivery box, which is sealed shut. An order receipt and shipping label are then printed and attached to the outside of the box.
• A shipping carrier, organized by the 3PL provider, picks the box up from the  warehouse and delivers it to the customer.

This is how a 3PL provider helps you with order fulfillment.

How leveraging 3PL in a supply chain can help your business

Let’s discuss how a 3PL provider can benefit you.

1. Cost benefits

If you choose to do it alone, you’ll have to buy or rent your own warehouse space. That, of course, would mean hiring and training staff to work in the warehouse.

3PL can eliminate this expense, enabling you to put more money into other areas of your business, such as sales and marketing. A move like that could increase your revenue. What’s more, since 3PL providers specialize in logistics, extensive networks they have in the supply chain means they can negotiate better rates.

2. Focus on core competencies

Handling the fulfillment process on your own, means going through a painful trial and error period while you set the system up. Inefficiencies in your warehousing and order processing will cost you time and money.

You won’t have to worry about any of that if you use 3PL. They’ll take care of warehouse management, carrier selection, the paperwork, and choosing the best shipping routes. After all, who better to handle your fulfillment than those who specialize in it, right? Using 3PL will free up time you can spend on your core competencies, leaving the 3PL you use to leverage theirs.

3. Access to expert knowledge

In the logistics industry, 3PL companies are well regarded. Their deep knowledge and  technical know-how could be a game changer for your business if there’s a disruption in the supply chain. That’s because if an unforeseen circumstance occurs, they are able to make the necessary adjustments to ensure that your order gets fulfilled as quickly as possible.

The fact that they specialize in supply chain management means that they’re constantly   upgrading their systems and using sophisticated technology like a warehouse management system (WMS).

All this helps track inventory in real time, giving you information you need to make good, data-driven decisions for your business.

4. Flexibility

If you are planning to expand into new territories, a 3PL can offer you flexibility. It can enable you to test new ground without having to put money into warehousing or staffing.

It means, in short, that you can try out a new market with limited upfront cost to see if it’s  worth it or not.

5. Ensures compliance

Whether you plan to fulfill orders locally or globally, you need to comply with many federal, state and local laws. Joining hands with a 3PL provider can help.  Regulations can be complex, and constant updating means they change over time.  Working with a 3PL ensures that your logistical operations are compliant with the law.

For instance, if you deal with consumer packaged goods (CPG), a 3PL can make sure that  perishable items are not only kept at the stipulated temperature, but that they’re handled properly until delivered to the customer’s doorstep. This includes proper labeling, like clearly showing when a product is hazardous. Taking care of these issues shelters you legally.

When it comes to international compliance, 3PLs are especially helpful. They can take care of all the required paperwork, from customs to transportation documentation,  ensuring that your international deliveries are smooth and stress-free.

Let Cin7 help you integrate 3PL into your business

Now that you’re clear about the advantages of 3PL, you may want to use it to streamline your business.  Cin7 could be a good way to do this.

Cin7 works with 200+ 3PL providers, and the list is constantly updated. By using Cin7, your orders will immediately be routed to a 3PL warehouse for fulfillment,  freeing you from the cost and hassle of having to take care of that yourself.

In addition to 3PL, Cin7 provides a complete suite of features that do everything from managing your inventory to giving real-time visibility. Cin7 lets you manage your inventory, orders, and fulfillment in a much better way.

Book a demo with our experts to learn more about how Cin7 can help you with 3PL.