3PL refers to “Third Party Logistics”; think of it like this:
If your business depends on delivering physical products to your customers, (e-commerce or traditional) then you know that your business success and customer retention depend on successfully fulfilling their orders. As you continue growing your business, you may find that fulfilling Customer Orders yourself:
- isn’t the best use of your time
- is evolving in complexity
- is increasing in cost
- requires too much effort to set up, maintain, evaluate your system and vendors
This is where 3PLs come in.
Third Party Logistics is when you outsource your Logistics to businesses that specialize in logistics offerings. These can include:
- Inventory Management
- ecommerce management
- Warehousing, kitting, pick and pack, consolidation
- Fulfillment
- Customer returns and reverse logistics
- Refrigerated, perishable, high-value, or hazardous products
- Tracking, visibility, reporting
- multi-channel or omni-channel retail
Leveraging 3PLs can free up Business Owners to accomplish more of what they want to focus on, and outsource what they don’t want to do to specialists (just as this 3PL chooses to outsource its accounting and IT management, in order to focus on providing outstanding logistics)..
3PL Order Fulfillment works like this:
- Receiving: You provide the 3PL with the inventory on hand for them to process orders.
- Warehousing: The 3PL will store products in their warehouse until you get an order that needs to be fulfilled.
- Picking: They will find the items your customer needs in their warehouse and collect it for Packing.
- Packing: The 3PL will box up the item according to your requirements.
- Shipping: While some 3PL’s have preferred Carriers, some compare shipping rates (Like us) so that you can get the best and most affordable pricing that’s out there!
3PLs offer return management providing free return shipping labels to your customers, depending on your return policy.
Fourth Party Logistics (4PL)
You may also hear of 4PL, this is what’s called “Vendor Procurement/Outsourcing”
It’s called “Vendor Outsourcing” because as the name implies, you’re hiring an organization to run the entirety of your supply chain operations. The 4PL has oversight of multiple vendors, who own their parts of your operation.
For a simple supply chain or fulfillment operation, this may seem a little overkill, or like a waste of time, or a waste of money for that matter. For companies like Apple, Tesla, or other large and mega corporations, it makes perfect sense. Managing large, complex supply chains spanning the globe can take focus away from a company’s purpose.
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If you’d like to discuss this topic further, or see how Bullwhip Logistics can help your business, please call us at 204-202-5148, or email info@bullwhiplogistics.ca.
-Your Local Bullwhip Team.
