Third-party logistics, or 3PLs, offer services that support shipments and shipping operations. They are mostly integrated into a company’s warehousing, as well as the transportation process. Third-party logistics providers include:
- Preparing products, regular storage.
- Supply chain management.
- Freight forwarding.
- Courier companies.
- Integrating & offering logistics and transportation services.
Along with that, they also handle customer service duties and provide reverse logistics.
Something Important to keep in mind is that not all 3PL companies are the same. Some 3PL companies will provide you with any possible request you might have, while others might only provide you with a few.
Pros Of Using 3PLs
3PLs will allow you to shift your focus on the rest of your tasks and give you more free time since they will be doing most of the transportation-related work for you. Along with that, you’ll be able to learn a lot along the way from 3PL companies, such as fulfillment and shipment optimizations.
By being a part of the fulfillment network, you’ll have the ability to offer your potential customers faster shipping, as well as generally getting your products to customers faster than before.
Maintaining fulfillment assets tends to be expensive, but by renting out warehouses and similar places over 3PL companies, as well as hiring a fulfillment team, you’ll minimize your spendings. Therefore, you’ll be able to direct those funds into more important parts of your business.
The 3PL Providers and Services
The standard 3PL provider is the most basic form of 3PL services. They perform various tasks such as packing, warehousing, as well as handling the distribution of goods. However, for most companies, this form of 3PL service isn’t the go-to choice since it doesn’t provide enough resources and solutions.
Service developer is a different form of 3PL services – it offers customers value-added resources such as tracing, tracking, cross-docking, packaging items, and providing a well-developed security system. Only when a company has a good IT foundation and a good focus on its economies will these 3PL services perform their tasks correctly.
Customer adapter is a form of 3PL service that takes complete control over the client’s logistics activities and improves upon the logistics dramatically.
Customer developer is the best option for an individual to choose regarding the service’s process and activities. This 3PL service takes over the company’s entire logistics function after it integrates itself with the customer. These service providers will typically have a few customers, as well as perform detailed tasks for them.
What Services 3PL Will Provide
Any service offered by the 3PL company of your choice will be provided in the 3PL company’s contracts and agreements, as well as service level agreements (SLAs). The documents provided will include details of the duration, cost, scope, and other aspects of any additional services the 3PL providers will offer.
There are a variety of logistics services out there. Various 3PL businesses will specialize in many different parts of the supply chain. But to put it short, most of those services will fall into the following sectors – procurement, order fulfillment, storage, and transportation. Along with that, 3PL service providers also offer a wide range of supplementary services, such as IT systems integration, inventory management, reporting, reverse logistics, data exchange, and many more.
Procurement services are connected to ordering and receiving various goods from other parts of the supply chain.
Order fulfillment includes receiving the order from customers, picking it up, and then packaging their orders. After that process is done, they will then ship them out to the end customer in question.
Storage provides a temporary place, such as warehouses and other similar locations, where company items can be stored away.
Transportation, as the name would imply, arranges and prepares the goods for consolidation, deconsolidation, management, and as the final, obvious step – transportation.
Storage and Warehousing Services
One of the main functions of a 3PL company is to manage the goods of the company that hired their services. The 3PL company stores those items in warehouses and similar places until they are needed elsewhere. Therefore, a 3PL business provides its customers with public warehousing, contract warehousing, specialist storage, high-security storage, in-warehouse tracking, and inventory management.
Public warehousing can be assigned to clients and customers, as well as the service is based on priority, demand, and capacity, while contract warehousing is assigned and rented out only for a limited amount of time.
Specialist storage defines a different kind of product, such as food, chemicals, and overall items that need to be kept in specific types of environments. On the other hand, high-security storage is meant for storing away valuable, volatile, or otherwise sensitive items.
Inventory management, as well as auditing, ensures accurate receipts, promising stock level management, as well as the distribution of goods. In-warehouse tracking, as well as positioning, is tasked with storage and retrieval of goods, as well as easy identification.
Distribution involves the transportation of items from the provider’s storage to the other parts of the supply chain or to the end customers. Services that can be offered include various distribution methods (such as drayage, cross-docking, brokerage, and many others), tracking of goods using GPS and IoT devices, and consolidation and deconsolidation of goods.
Other services that 3PL companies provide would be: Freight forwarders, Moving goods between methods of transport, Reverse logistics, Environmentally controlled freight, as well as consolidation and deconsolidation.
Freight forwarders manage and organize shipments of other businesses. Along with that, they also work across different kinds of transportation (land, sea, and air). Freight forwarders could be 3PL providers and work with logistics companies by renting out space in distribution fleets, managing relationships with their clients, creating schedules, and reporting progress.
Consolidation services combine goods from multiple shipments into one big shipment since items can be transported way easier with this method. Deconsolidation services offer the opposite by splitting the things from various loads into smaller groups, making it easier to find and deliver items to recipients and different destinations.
Although there are several different methods for transportation, there are a few main ones used across logistic companies. Intermodal transport, for example, uses shipping containers that integrate easily with any type of transportation. Cross-docking provides easy loading and unloading of items, easy transferal, and also includes consolidation and deconsolidation.
Reverse logistics provide return services. Suppose there is a wrongly delivered product, not fit-for-purpose, or any other reason for dissatisfaction. In that case, reverse logistics allows customers to return them to where they got shipped from. Along with that, reverse logistics deals with customers’ refunds, re-sending said products, as well as simply disposing of the unwanted products.
Certain items need to be transported with care, as some things are sensitive, fragile, or might contain chemicals. Therefore, environmentally controlled freight services provide well-equipped, specialist vehicles that can preserve the said items to reach their destination.
What Is a 4PL
Essentially, the fourth-party logistics (4PL) take the 3PL services one step further. Fourth-party logistics manage various resources, infrastructure, technology, as well as external 3PLs to build, design, and provide solutions for supply chain businesses.
Although the supply chain industry is still a bit confused about what 4PL services offer exactly, there is a rising number of logistics consulting and management companies. They are equipped with experts who manage complex and large-scale supply chain functions and look out for the most innovative and latest technology solutions that would fit companies.
Difference Between 3PL and 4PL
Aside from 4PL services essentially encompassing 3PL services, they also include logistics strategies, freight sourcing strategies, consultancy, business planning, network analysis, network design, project management, Inventory planning, Inventory management, Inbound and outbound logistics, and reverse logistics management. Along with all of that, they also provide control tower and network management services. 4PL companies coordinate a wide variety of supplier bases, as well as analyze transportation spendings, capacity utilization, as well as carrier performances
Essentially, the 4PL companies manage all of the 3PL services altogether. These services need to constantly be in contact and work with customers to demonstrate the balances and checks and create and maintain confidentiality agreements. These agreements prohibit information and data from being shared outside of the customer’s other 3PLs and transportation providers.
4PL partners can step in to manage the complexity of the supply chains and forward deployment or decentralized distributions. In short, 4PL companies manage the multiplying number of resources that keep arising and support e-commerce and omnichannel services. These companies also manage relationships, optimize networks to use parcel carriers instead of using LTL or truckload services.
If you need help or want to be more cost-efficient, RedBird Logistics offers a range of logistic services – from simple LTL to personally tailored solutions. You can rest assured that they will ensure that your logistics processes are running smoothly and as efficiently as possible.