What is Third-Party Logistics (3PL)?​

Third-party logistics, or 3PL in short, is the strategy of outsourcing the logistics and supply chain management to a third-party company. These services are designed to offload the responsibility of handling logistics, helping to improve operations efficiency and reduce costs in the process.

The specifics of 3PL services can vary significantly, with some providers offering the full suite of third-party logistics solutions while others help with different parts of the supply chain, such as warehousing, transportation, data management, or a combination of these.

The main appeal of utilizing 3PL solutions is the ability to free up time and resources for other activities. 

Instead of having to worry about various overhead and operational costs that come with handling your own logistics and supply management, 3PL enables companies to leverage the expertise of third-party companies that have the infrastructure, experience, and streamlined processes that often produce better outcomes for a more affordable cost.

At the same time, the advantages of 3PL can improve customer relationships as well, with better processes meaning faster delivery, fewer disruptions, and more affordable shipping.

3PL: Main Principles

One of the biggest appeals of using third-party logistics solutions is that it offers a simple and streamlined process for going from the customer placing an order to the product being delivered.

Here’s how it can look when working with a full-service 3PL provider:

1. The customer places an order on your website and the information is passed on to your 3PL provider. If you use an ERP solution like ApparelMagic, you can integrate with 3PL solutions to streamline your data and get the shipments out even faster.
2. Once the 3PL provider receives the order, it will locate the item in their inventory, pick it up, and pack it for shipment.
3. Once the order is ready, the 3PL provider will ship it to the customer according to the selected shipping method.
4. The customer receives the order. In case of any issues, they can either work with your support team or resolve it through the 3PL provider.

As you probably noticed, there’s virtually zero oversight required from the store’s end. After the sale is made, everything can be handled by the 3PL services provider, freeing up a huge amount of time and resources that can be used for growing the business.

Types of 3PL Providers

When analyzing the types of 3PL providers, you will find a variety of options based on company size, services offered, and whether the shipments are handled domestically or internationally. But in general, most of these providers can be grouped into two main categories – full-service and specialized 3PL providers.

• Full Service 3PL – As the name implies, full-service 3PL providers offer complete logistics services, taking over the entire process from the time the order is placed to when it’s delivered to the customer’s door. Once set up, the process runs virtually on autopilot and requires little to no intervention from the brand. Full-service 3PL providers can also offer integrations with ERP solutions and may even offer same-day shipping.
• Specialized 3PL – Specialized 3PL providers typically don’t offer the full suite of services, instead focusing on one or a few aspects, such as warehousing or transportation. When you feel confident you can handle some aspects of logistics yourself, specialized 3PL providers can be useful in providing high-quality solutions in areas where you are currently lacking.