What is 3PL? What Services Does a 3rd Party Distribution and Warehousing Company Provide?
Do you keep hearing about 3rd party logistics services? Are you still not sure what it means and how these services are helping various businesses? Do 3rd party logistics services include distribution and warehousing? Can any business that manufactures and sells products make use of these services?
Let’s find answers to all the above questions and more. Even though many enterprises are successfully using 3pl (third-party logistics) services, there are still businesses that do not have much idea about these services. Whether it is because the enterprise is following traditional methods or because the management thinks that the business volume is too less to outsource logistics services, not all enterprises are taking advantage of third-party services.
By understanding what they are and how these services can help improve the overall efficiency of the business, you can rethink the decision and hire a logistics provider to handle the supply chain activities on behalf of the enterprise.
In simple terms, a third-party logistics provider is a specialist company that offers an array of services ranging from distribution of the products to warehousing, transportation, and managing returns. The companies provide end to end supply chain services and even other additional services in many instances. A 3pl company is also known as a 3rd party distribution and warehousing Company as these two are the primary services it offers to all enterprises.
Procurement of Raw Materials
The role of 3rd party logistics company starts at the very beginning of the supply chain. Enterprises do not have to make separate arrangements to deal with the suppliers for raw materials. The company can also provide information about reliable suppliers and suggest ways to streamline the procurement and use of raw materials to cut down the cost of manufacturing the product. The company keeps track of the stock levels and orders more materials as and when necessary and delivers them at the manufacturing center.
Warehousing- Storing Inventory
Once the final product exists the manufacturing unit (or the quality control unit), they are directly moved to the storage center- the warehouse. This warehouse will be owned by the 3pl company and provides complete security to store the products until they need to be packed and shipped to their respective destinations. Temperature-sensitive warehouses are used to ensure that the quality of the products is not compromised.
Cross docking is the process in which the products are moved from an incoming vehicle to an outgoing vehicle, without moving them to the warehouse in between. Perishables are usually distributed through cross docking services, where the dock and the containers used for transportation are temperature-sensitive. Cross docking shortens the delivery cycle and makes it possible to deliver the product to the customer in less time.
The process of readying the shipment for transportation is known as order fulfillment. When the order request is forwarded to the 3pl company, the required products are taken from the warehouse to be checked for damages and packed for delivery after weighing and noting down the related details. Once the package is ready along with its papers, it is moved to the container for the next step in the process.
Depending on where and how the products should be delivered, the packages are taken to their respective destinations. For example, a shipment might have to be taken to the airport as it will be delivered at the destination through air transport. The 3pl company will ensure that the container will reach the airport well on time to complete the checking and be loaded into the flight. The company will track the shipment as it lands at the destination, goes to the distribution center, and then gets handed over to the delivery people to take them to the respective customers.
Consolidation and Deconsolidation
This is pretty much an inherent part of the services provided by the 3rd party distribution and warehousing Company. Consolidation is the process of combining goods from multiple shipments into a single shipment so that it can be transported easily. Instead of sending smaller shipments in individual vehicles, the company will pack them together and transport them in a single large container. This will save money for the logistics company and also the enterprises. The enterprises will have to pay only their share of the total cost of transportation.
Deconsolidation is the reverse process in which one large shipment into divided into smaller ones. This is done when the products have to be sent to different destinations through different means of transportation.
Small, medium, and large scale enterprises can save money and increase business efficiency by outsourcing the logistics services to 3pl companies. You can contact the top third-party warehousing and distribution company for more information about the services.