3PL Supply Chain Management: What It Is and Benefits
Quick answer: 3PL supply chain management means handing the logistics part of your supply chain — transportation, warehousing, inventory management, order fulfillment and returns — to a third-party logistics (3PL) provider. Businesses use a 3PL to cut fixed costs, get better shipping rates and deliver orders faster, while they focus on sourcing, sales and marketing.
Supply chain management is a factor that must be considered in e-commerce. The development of the Internet and the globalization of the market have made people from different countries and regions choose to shop on multiple platforms. To ensure the timeliness of shopping and meet the timely needs of consumers, supply chain management plays an irreplaceable role. Under these requirements, 3PL appeared.
What is Third Party Logistics (3PL)?
Third-party logistics, also known as logistics outsourcing or contract logistics, has always been one of the most misunderstood terms in logistics and supply chain management.
Third-party logistics refers to a company that provides logistics-related services to other companies, such as transportation, warehousing, inventory management, order management, information integration, and value-added services, or cooperates with related logistics service providers to provide more complete services.
What is Supply Chain Management?
Supply chain management refers to the effective organization of suppliers, manufacturers, warehouses, distribution centers, and channel providers to minimize the cost of the entire supply chain system while satisfying a certain level of customer service. It covers the management of the manufacture, transshipment, distribution, and sale of products.
What Does a 3PL Do in the Supply Chain?
A 3PL sits between your suppliers and your customers. Goods arrive from the factory at the 3PL warehouse, where they are received, checked and stored. When a customer orders from your store, the order is sent to the 3PL automatically; the warehouse picks, packs and ships it, and the tracking number flows back to your store. The 3PL also handles restocking, returns and, in many cases, value-added services such as custom packaging, kitting and quality inspection. For ecommerce sellers, this turns logistics from a fixed cost (your own warehouse, staff and vehicles) into a variable cost that grows with order volume.
What are the Features of Effective Supply Chain Management?
An effective supply chain management system includes many aspects of measurement, and it must be able to reconstruct the distribution network, ensure the rationality of the distribution network, and solve the problem of distribution strategy. Supply chain management must be able to solve the problem of inventory control, and must have reasonable product involvement, guarantee technical support, and measure customer value at one time.
6 Advantages of Third-Party Logistics in Supply Chain Management
Save investment
According to the survey results of industrial vehicles, the main reason for companies to dismantle their fleets and instead seek public transportation services is to reduce the related fixed costs, which include not only the investment in purchasing vehicles but also related to workshops, warehouses, deliveries, etc. Expenses related to facilities, packaging machinery, and employee wages.
Save money and clear inventory
Third-party logistics can provide a more professional transportation mode, so it can save more costs for customers in terms of transportation costs. In addition, it can also clear the company’s inventory, which is also a good value-added service for companies, and It is also very beneficial to the flow of funds of enterprises.
It can improve the operating efficiency of the enterprise
If the goods are entrusted to third-party logistics, then the enterprise does not have to worry about transporting its goods, and can have more time to manage its enterprise. Operational efficiency will naturally rise to a higher level.
Improve corporate image
Third-party logistics service providers and customers are not competitors, but strategic partners. They consider customers and optimize their supply chain management through a global information network. They have complete control over the entire supply chain with complete facilities and a well-trained workforce; they help customers improve service and build brand image by shortening lead times through a global network of shipping and service providers.
The image of the customer’s enterprise has been greatly improved
Third-party logistics and customers are a kind of partnership relationship, and all aspects must be considered for customers. In addition, the solutions proposed by third-party logistics are all customer-oriented to improve logistics transportation efficiency. To do better to establish their brand image.
Innovation management
Third-party logistics services can use innovative logistics management technology and advanced channel management information system of logistics service providers to open up business development paths for themselves.
Excellent third-party logistics service providers generally have extensive networks around the world and have experience and expertise in developing logistics services. When an enterprise plans to conduct business in an unfamiliar geographical environment, it can make full use of the professional technology and experience of third-party logistics service providers to carry out relevant operations.
Top 5 Third-Party Logistics Providers to Improve Your Supply Chain
Amazon
Amazon logistics can realize zero inventory transfer, provide an efficient warehouse management mechanism, and achieve effective control of inventory by establishing good cooperative relations with suppliers. Big data can be used to predict consumer demand and proactively respond to orders.
DHL
DHL connects people in more than 220 countries and territories around the world. With the combined efforts of the company’s more than 380,000 employees, DHL can provide comprehensive services and customized solutions for the management and transportation of letters, goods, and information.
Honest FulPhilment
The Third-Party Logistics Service provided by Honest FulPhilment can provide customers with a full range of services. Honest FulPhilment’s 3PL works with 18+ overseas 3PL warehouses, which can meet the needs of different people in different regions and ensure the timeliness of logistics. Moreover, Honest FulPhilment has a professional logistics service team, which can ensure the timely update of logistics information, and provide a professional supply chain management team to escort each of your transactions.
UPS
UPS (United Parcel Service, Inc.) was founded in 1907 and is headquartered in Atlanta, Georgia, USA. It is a world-leading logistics company, providing parcel and cargo transportation, international trade facilitation, advanced technology deployment, and many other solutions designed to improve the efficiency of global business management.
FedEx
FedEx is an international express group that provides overnight express, ground express, heavy cargo delivery, document copying, and logistics services. FedEx provides customers and businesses with a comprehensive range of services covering transportation, e-commerce, and business operations.
Conclusion
Third-party logistics plays an important role in the entire supply chain management process. Choosing a good third-party logistics provider can help us reduce logistics costs, expand the brand effect of products, and improve our profits. Honest FulPhilment can help you improve your benefits and will be your best choice! Come and contact us！
FAQ
What is a 3PL in supply chain management?
A 3PL (third-party logistics provider) is an outside company that runs part of your supply chain for you, such as transportation, warehousing, inventory management, order fulfillment and returns. You keep control of sourcing and sales while the 3PL handles the physical movement and storage of goods.
What is 3PL supply chain management?
3PL supply chain management is the practice of outsourcing logistics functions to a third-party provider and coordinating them with your suppliers, warehouses and sales channels. The goal is to lower logistics cost and deliver orders faster than you could with your own fleet and warehouses.
What are the benefits of using a 3PL in the supply chain?
The main benefits are lower fixed costs (no need to own warehouses or vehicles), access to discounted shipping rates, faster and more accurate order processing, easier expansion into new regions, and more time to focus on product and marketing.
What supply chain solutions do 3PL warehouses offer?
Typical 3PL warehouse solutions include receiving and storage, inventory tracking, pick and pack, kitting and custom packaging, shipping through multiple carriers, returns processing and integrations with ecommerce platforms such as Shopify and WooCommerce.
What is the difference between 3PL and supply chain management?
Supply chain management is the overall planning and coordination of how products are sourced, made, stored and delivered. A 3PL is a service provider that executes the logistics part of that supply chain on your behalf.