In the last century, the product selling process on e-commerce platform involved two parties, manufacturers and suppliers. But currently, in this digital world, third parties are arising that manages and ships the inventory. Third-party logistics (3PL companies) is a term given to the organizations that handle the logistics, fulfillment, and procurement of products of an e-commerce store.
They are necessary because most e-commerce stores and start-ups simply can’t manage all aspects of the business from product manufacturing (sometimes retailing) to marketing, sales, inventory management, and shipping. The 3PL providers help them take half of these services off their hands, allowing them to concentrate on expanding their business.
Let’s take an example:
Let us consider a start-up company that wants to ship their goods from, say Location A –New York to Location B – Chicago, and the company does not have their own means of transportation, so what to do in this type of circumstances? They can call/rent a third party so that they can transport their goods from location A to location B. This third party is generally known as 3PL (third-party logistics) Company.
In layman terms, Third Party Logistics is outsourcing the transport and logistics activities. They are in-charge for each and every activity like Warehousing, Packing, Transport, Inventory management, Goods forwarding activities, until it reaches the receiver. It acts as a bridge between the manufacturer and receiver in supply chain activity. They may have their own department for this service or hire third parties. Not only transportations 3PL services may also include global shipping and in the sector of information technology as well to manage e-commerce, customer relationships, transportation, and warehouse operations.
By scaling and customizing services, 3PL logistics companies can best meet your specific needs. It’s always up to the start-up company, just how much a 3PL services they need. A 3PL company can provide a single service for the company’s supply chain or deliver a bundle of services that extend across multiple aspects of the company’s supply chain. These services work with the company to provide visibility to all aspects of the supply chain. Additionally, leading 3PL services create value in ways that enhance the company’s financial, operational, and end customer performance.
How it helps E-commerce Startups in Saving Thousands of Dollars?
Working with a third-party logistics company provides many advantages. Let’s have a detailed view of the benefits of using 3PL services.
Gain expertise and knowledge
Supply chain logistics can be complex; warehousing fulfillment and shipping all come with various challenges. When it comes to supply-chain logistics, 3PL companies are experts and can impart clients with their experience and connections to quickly streamline processes.
Additionally, 3PL companies can give insight into issues that can come up when shipping internationally. Such issues contain customs, documentation, duties, and divergent shipping regulations. Working with a third party logistics organization can also discharge the stress of trying to comply with international shipping protocols.
Save time and money
Using a 3PL service can potentially eliminate the need to invest in warehouse space, technology, transportation, and employees to carry out logistics processes, allowing for more focus on your core competencies.
Additionally, 3PL services can make organizations proactively aware of supply chain mistakes that could be costly and risky. By providing industry forecasting, 3PL service companies also help optimize inventory levels and save on inventory holding costs.
When working with a 3PL companies can also save time by receiving the expertise needed to carry out supply chain logistics efficiently.
Scale operations and be more flexible
When a company uses a 3PL services, they are able to scale space, labor, and transportation according to current inventory. Additionally, 3PL companies are often able to ease the transition between seasonal periods and industry fluctuation.
When growing into new markets, a 3PL company aids growth in new regions. Typically, 3PL companies are always looking for ways to improve aspects of supply chains. Therefore have the tools and technologies necessary to make adjustments. Management software can scrutinize and observe supply chain techniques to eliminate inefficiencies. Appealing 3PL services are expected to result in constant improvements being made to the logistics process of the company.
Third-party logistics service providing companies can offer help streamline supply chains, expertise and save time and money. By trusting 3PL companies with your shipping logistics. The start-up can easily make a difference in the way the business functions.
Also allows the start-up to save thousands of dollars. Hence, can use these funds on increasing the overall value to the customers.
