An Overview of 3PL Services

Most people in business are aware of what 3PL service entail, but many uninitiated people are not. In the simplest terms, 3PL is a third-party logistics provider. When we talk about third party providers, it indicates there are three components to the business relationship. Those three components are the business owner, a carrier, and a logistics provider. 

To better illustrate how they work in concert with one another, let us use an example. When a 3rd party logistics provider is hired, the business moves their inventory to the 3PL’s warehouse. When orders are placed, through an ecommerce site run by the business, they go to the 3PL warehouse. After the orders arrive, the logistics provider fulfills the orders, and ships the items from the warehouse. It streamlines the ordering process and outsources the fulfillment center and inventory components of the business. This can cut costs and allow resources to be redeployed to other areas.

What are the Features of a Basic 3PL Relationship?

Even at the entry level, third-party logistics companies can provide multiple benefits. It is all about making things more efficient for your company. For a basic 3PL provider, the expected services they can provide are as follows:

Inventory ManagementWarehouse ServicesOrder Fulfillment – Packing and Picking ItemsShipping Orders

What Additional Features Come with an Advanced 3PL Company?

While 3PL warehousing services are important, they are considered rather basic, with regard to third-party logistics companies. When considering moving to an advanced 3PL company, businesses can also receive the following benefits:

Information Technology SolutionsManagement of Returned InventoryCustom Clearance Service

For many companies, the idea of upgrading and maintaining IT systems carries a heavy cost. By outsourcing network, server, and computer systems, it cuts cost across the board. Companies no longer have to worry about keeping their systems updated. Upgrades are included. Managing return items can also be a hassle, but with a 3PL warehouse solutions provider that is taken care of.

Which is better 3PL or 4PL?

The specifics of a third-party logistics provider were outlined above. So, how does a 4PL differ from a 3PL? As you may have guessed, a 4PL is a fourth-party logistics provider. Just as a 3PL connects three parties, a 4PL connects four. Those parties are the business owner, a carrier, a logistics provider, and a supply chain manager. It should be noted, a 4PL does not own any assets and only focuses on the management of the 3PL and their responsibilities.

So, what kind of services come with a fourth-party logistics service provider?

Inventory ManagementResource Planning and ManagementLogistics Strategy and ShippingTechnology and Infrastructure StreamliningSupply Chain SolutionsBusiness Project Management

For those companies who only seek a partner to store inventory and fill incoming orders, then a 3PL will meet those needs. For those companies who want to establish a more advanced logistic strategy, 4PL is the way to go. They can provide advanced logistics strategy, manage supply chains, and plan and deploy resources.

Are There Other PLs Available?

Believe it or not, there are. While 3PL is the most common, there are additional logistical provider relationships. Look below:

1PL2PL3PL4PL5PL

The 1PL is a single party logistic service provider. This means the business owner handles everything themselves. All logistical decisions are controlled by the business owner. They take care of their own inventory, order fulfillment, and shipping.

With a 2PL, there is a second-party logistics provider. This means there are two parties; the business owner and the carrier. The main focus is to transport the business’s goods via placed orders. They do provide warehouse storage and handling services too.

We have already discussed 3PL and 4PL, so we will move onto 5PL. Just like a 4PL, they do not own assets. The five components are a business owner, a carrier, a logistics provider, a supply manager, and a supply network manager. Their main focus is cost savings. 

What Are the Benefits of Working with a 3PL Provider?

Products Reach Customers FasterTime Savings

3rd party logistics providers, like Octochem, have partnerships with shipping companies. This means they can address existing shipping issues and streamline the process for your company. In some cases, 3PL have their own shipping trucks and airlines. What does this mean for your business? Faster processing, more efficient shipping, and faster deliveries. 

Think of the time it takes to print a shipping label, packing the shipments, shipping them, and then updating customers on their orders. Outsourcing those duties would mean time savings. The time could be used for:

Social Media PromosMarketingNew Product DevelopmentStore Improvements

Just like with any business model, time is money. Let Octochem be your 3PL to help you save money and be more successful

When Do I Need a 3PL?

Many ecommerce companies find they need a 3rd party logistics provider when they experience a period of growth. It becomes too much to manage with addressing all the needs of supply chain management, inventory, and order fulfillment. By having a trusted partner, like Octochem, as your 3PL warehouse solutions provider those duties are our responsibility. Why not contact the leader in 3PL logistics companies? Reach out to Octochem today to find out how partnering with us is the best decision you could make. We want you to succeed. We want to be your trusted partner. We are Octochem.