3PL stands for Third Party Logistics. A 3PL company or firm manages and provides solutions for all the logistics requirements of an organization. The term 3PL is generally unfamiliar to people who are new to the logistics industry. This is not so surprising because every industry has its own set of buzz words.
3PL can be traced back as early as 1970’s as companies were outsourcing more and more logistics services to 3rd parties. Over time, 3PL service providers have expanded their services to cover the specific needs of various companies. Today, most 3PL service providers offer a range of transport options, warehousing, inventory management and systems integration. Technology has become the core competitive advantage of the third party logistics service providers.
Reasons to use 3PL provider
There are several advantages a company can gain by using a 3PL. Basically, a 3PL offers their services to a large number of companies. In doing so, they are able to combine the total requirements of all these companies which increases their purchasing power. Third party logistics providers have a wide resource network that gives advantages over in-house supply chains. Businesses can take advantage of 3PLs relationships and volume discounts that will result in lower overhead cost and fast service.
Businesses can save time and money by using a 3PL provider because it defeats the need to invest in warehouse space, transportation, technology, and staff to do the packing and other logistics process. 3PL providers can save businesses from costly mistakes, and can help build a multi-location distribution network with lower risk and higher return.
3PLs are well informed of industry best practices, and stay updated with the latest improvements in technology. 3PL services will give you peace of mind knowing that your logistics needs are being taken cared of dependable and qualified professionals.
For businesses that are seasonal in nature, 3PL providers have the capacity to scale warehousing space, labor, and transportation according to company’s inventory needs to provide full support during high months of your business while cutting back during slack months.
3PL experts will see to it that your needs are met by using the most agile, most efficient, and cost effective methods. Third Party Logistics providers can boost profits, lower wait times, and improve customer service. It is quite common for companies to save between 30% to 50% of their overall logistics costs by outsourcing their requirements to a good 3pl service provider.
Another benefit that is seldom mentioned but very important is that many 3PL’s will offer you service guarantees and SLA’s, which give you that much needed confidence and peace of mind knowing that the 3PL will take just as much care and responsibility when you outsource with them.
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