"I have been consistently impressed by their ability to handle our complex needs and willingness to say yes to any challenge. Most importantly, I believe in the character and work ethic of the team."
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"I have been consistently impressed by their ability to handle our complex needs and willingness to say yes to any challenge. Most importantly, I believe in the character and work ethic of the team."
Mike, Co-Founder & CEO
Running a growing business means juggling many responsibilities, including order fulfillment. The 3PL industry streamlines order fulfillment by allowing businesses to outsource their shipping operations to logistics experts. This provides business owners with more time to oversee other aspects of business development, such as marketing and product development. Read on to become acquainted with the basics of 3PL and the ways it can benefit your business.
3PL, short for third-party logistics, refers to the management of warehousing, shipping, and/or delivery by a third-party provider. 3PL as we know it today began in the 1980s with the deregulation of the US trucking industry and really took off in the 1990s due to growing demand for supply chain management in emerging economies.
Nowadays, 3PL providers handle everything from inventory management to last-mile delivery, allowing businesses to ship products efficiently without building their own distribution networks. By working with a 3PL, your company can focus on making and selling products while experts handle the complex task of getting those products to customers.
Using a 3PL provider simplifies logistics by giving businesses a single point of contact for their entire distribution process. This arrangement creates a more streamlined supply chain and helps companies operate more efficiently. 3PLs contribute valuable expertise and resources that most businesses struggle to develop independently. The benefits of working with a 3PL company are:
3PL encompasses a number of activities related to order fulfillment. Once a customer clicks “Place Order” on your website, your 3PL provider will jump into action to prepare their package. The main stages of the 3PL process are:
Once your products reach your 3PL provider’s warehouse, staff will check that they match your shipment details. They will count the products, check for any damage, and enter each item into an inventory management system. They will assign location codes to your products so they can be found when a customer places an order.
Most 3PL providers will ask you to give advance notice before sending a shipment so they can prepare space for your inventory. Once your stock has been processed, it will be made available for customers to order on your sales platform.
After receiving your products, your 3PL provider will store them in strategic locations based on size and popularity. In some cases, each product type may get its own location, whether on shelves, in bins, or on pallets, making products easier for staff to find when filling orders. Most warehouses have 24-hour monitoring systems and other security protocols to keep your inventory safe. Proper warehousing makes your stock easy to locate and protects it from theft and damage.
When a customer buys something from your sales platform, the order information will go straight to your 3PL provider’s integrated system. Warehouse pickers will get a list of products to collect for shipment. They will then walk through the warehouse, gathering all the items in the order and checking them off the list. Once all the items have been picked, they will be packed in boxes or poly bags with insulating material to prevent damage. Some 3PL providers may even let you use custom boxes with your business logo to enhance your customers’ unboxing experience.
Once an order is packed, your 3PL provider will choose the best shipping carrier based on cost and speed. They will print a shipping label, schedule a pickup with the carrier, and load the package onto a delivery vehicle. Most shipping carriers provide tracking information, which can be accessed by you and your customers.
Since 3PL providers ship large quantities of packages daily, they usually get better shipping rates than small businesses. Both you and your customers can benefit from these cost savings, which make shipping more affordable for everyone.
When customers want to return products, a 3PL provider can simplify the process. They receive returned items, check them for damage, and either put them back with the rest of your inventory or throw them away. If the returned items are reslotted, your inventory count will be updated so that you know exactly how many sellable products you have. Some 3PL companies also collect information about why items are returned, helping you identify issues with certain products.
Not all 3PL providers offer the same services. While some handle everything from warehousing to shipping, others only manage one part of the supply chain. The type of 3PL provider you choose depends on what your company needs most. Let’s take a look at the three main types of 3PL providers:
Transportation-based 3PL companies focus on moving products from one location to another within the supply chain network. These companies include familiar names like UPS and FedEx and local courier services. They move goods on different modes of transportation, including trucks, trains, ships, planes, and last-mile delivery vehicles. Beyond physically moving goods, these companies may provide other services, including shipment tracking and route optimization.
Warehousing-based 3PL providers operate facilities that receive, store, and process items. They handle the step between production and delivery, effectively managing inventory to prevent stockouts and product surpluses. When orders are received, these companies ensure they are picked and packed for shipment, coordinating with transportation-based 3PL providers to choose a shipping route. Warehousing-based 3PL companies also offer kitting, assembly, and returns management.
Financial- and information-based 3PL providers take care of the business side of logistics without physically handling your products. These companies will examine your shipping information, locate cost-saving opportunities, and negotiate better rates with carriers on your behalf. They can provide software that enables you to track expenses, compare shipping options, and make better decisions about how to ship your products. Some information-based 3PLs also run online marketplaces where you can get quotes from multiple shipping companies at once. These 3PLs are best for businesses that have already arranged warehousing and shipping but are interested in reducing costs and improving efficiency.
A growing number of businesses are turning to 3PL providers for supply chain management. If your business belongs to one of the following industries, 3PL may be the right option for you.
Many online sellers using platforms like Amazon, eBay, Etsy, and Shopify rely on 3PL partners to manage their inventory and deliver their products. E-commerce businesses of all sizes can benefit from the scalability and efficiency of outsourced logistics. In addition, 3PL partners can provide valuable insights on purchasing trends to help e-commerce businesses avoid stockouts and product surpluses. Retail companies can also benefit from outsourced warehousing that adjusts to seasonal demand and provides quick distribution to restock shelves.
Companies in the manufacturing industry need to stay ahead of the competition by maximizing efficiency. One way of doing this is by optimizing supply chain management. Components and finished products need to move quickly from manufacturers to sellers to maintain customer satisfaction. A 3PL partner can help you do this by processing orders efficiently, optimizing shipping routes, and scaling to accommodate increases in demand.
Electronics need to be handled with extra care when being packed and shipped. A good 3PL company can provide electronics companies with the specialized storage, handling, and packaging needed to ensure these products make it safely to customers’ doorsteps. Many 3PL companies also use surveillance systems to protect valuable electronics and offer streamlined returns and exchanges.
Managing inventory can be complex for clothing stores, given their wide range of SKUs for different sizes, colors, and styles that change with each season. Clothing stores experience higher return rates than most vendors and require fast and easy reverse logistics. 3PL providers can streamline inventory and returns management for clothing companies, allowing them to focus on boosting conversions. Jewelry sellers, on the other hand, need exceptional security for valuable pieces made of gold, silver, and precious stones. Many 3PL companies have advanced security protocols tailored to high-value items like these. Although jewelry and apparel come with different handling requirements, both industries can benefit from 3PLs that provide custom packaging that maintains product presentation for a memorable unboxing experience.
Businesses selling practical and decorative items for homeowners need a 3PL partner that can handle products of different sizes and fragility levels. Many 3PL companies have standardized procedures for packing fragile and bulky items and are able to scale to seasonal spikes in demand. Using advanced inventory management systems, 3PL providers help homeware and kitchenware sellers manage large collections of products with real-time updates on stock levels across product categories.
Pharmaceutical companies and medical distributors operate in markets where the timing of delivery highly impacts patient care and treatment. Any business selling medication must maintain strict quality control guidelines to ensure patient safety. For example, companies selling insulin need to make sure it is refrigerated during transportation and storage. Outsourcing supply chain management to a 3PL company with medical expertise can facilitate order fulfillment, helping shipments arrive on time and in optimal condition.
Food and beverage companies need effective inventory management that ensures older products are shipped out first, reducing waste and saving money. Some 3PL companies offer storage and shipping for perishable and non-perishable items, while others only handle non-perishables. 3PL companies that handle perishable food items provide temperature-controlled shipping and warehousing so that these products stay fresh.
The ideal 3PL partner should provide fast shipping, scalable solutions, and exceptional customer service. Choosing the right 3PL provider for your business is essential to promoting long-term growth and brand loyalty. When making your decision, keep these factors in mind:
Let the experts handle your logistics so you can focus on growing your business. Encore Fulfillment provides comprehensive 3PL services, including inventory management, order processing, carrier selection, and returns management. Our supply chain solutions are designed to scale with your business, whether you plan to add new product lines or are experiencing a sudden increase in demand. Our team handles every order with care and provides you with full visibility of your inventory at all times. Contact us today to get started!
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