3PL Specialties

Oftentimes, 3PLs specialize in certain areas. This is a good thing for their customer base, as the 3PL becomes highly competent in a particular area, which brings expertise and further potential cost savings through near flawless execution. Common areas of differentiation include:

• Product based (apparel, food, pharmaceutical, etc.)
• Sized based (small volume versus high volume of orders and shipments, etc.)
• Location based (single location, multiple locations, multiple countries, etc.)
• Service based (B2C, B2B, subscription fulfillment, cross docking, etc.)

3PL Warehousing Logistics Services

3PLs manage warehousing for shippers—providing the warehouse space to store their goods at any point in the supply chain, which might include storing materials or finished products. 3PL Warehousing services also involve inventory management, order fulfillment, picking and packing, and distribution. These are the segments of the supply chain that occur between a shipment’s delivery and its next pickup, to and from its temporary storage location before it is transported to the customer. To summarize, the following are the services provided:

Warehouse and Inventory Management: 3PLs receive product and manage the storage levels of products, typically using a WMS (warehouse management system). Customers can view stock levels, receive notices when low levels are hit, etc.

Order Fulfillment: Order fulfillment is the process by which warehouse staff pick orders and prepare them for shipment. The process involves physically picking the orders, quality checking them for accuracy to avoid mis-shipments and packaging them for shipping.

Shipping: 3PLs provide full-scale shipping services, whether it be using their own, asset-based options (couriers, delivery vans and trucks, etc.) or by using the freight services of other companies, both on a parcel basis (USPS, FedEx, UPS, DHL, etc.) or greater than parcel basis (LTL, FL, etc.). Shipping provided by 3PLs includes both domestic shipping options as well as international shipping to customers abroad. 3PLs also provide a wealth of tracking options for ensuring that delivery is confirmed by recipients.

Reverse Logistics: Full-service 3PLs also complete the entire cycle of the fulfillment process by providing returns services, also known as reverse logistics. Reverse logistics provides a mechanism for customers to return product. The 3PL inspects the returns, disposes of damaged product, and returns the salvageable product back to inventory for resale.

3PL Transportation Logistics Services

A 3PL can either be asset-based or non-asset based, meaning it owns its own trucks or it utilizes outside carriers, respectively. When it comes to transporting shipments, 3PLs manage both inbound and outbound freight for the shipper. Inbound shipments could come from a domestic manufacturer or from overseas, arriving in containers or via air freight. Outbound shipments take the product from the warehouse to the customer via full truckload (TL) or less-than-truckload (LTL) shipments.

When 3PLs are non-asset based and, therefore, use outside transportation carriers, it’s important to note that there is a high likelihood that the 3PL is marking up freight. Not that this is a bad thing, but it’s important to know so that you can negotiate the best rates with the 3PL and minimize the amount of markup. Alternatively, when a 3PL is asset-based, they will have the greatest control over rates, and can provide the most aggressive shipping options.

What Does a 3PL do?

Businesses that are considering utilizing a 3PL need to ask: what are the specific types of services a 3PL can handle for you? 3PLs work with you to give you the services uniquely needed to fit your business. They’re equipped to manage your transportation and warehousing segments of the supply chain.