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What is a 3PL?

17Feb, 2014
What is a 3PL?

What Is A 3PL?

3PL stands for third-party logistics provider. Customers outsource their fulfilment process to these companies in order to save time, money, and to avoid the hassles of managing logistics in-house. Not all 3PLs do the same thing, however, as some have expansive value-added services while others offer only the essentials.  When we say the “essentials,” we are referring primarily to the core components of the fulfilment process. These include warehousing, inventory management, order management, pick and pack services, and distribution. Logistics companies who provide only these services are often referred to as Standard 3PL Providers.  The next level up from a Standard 3PL is a “Service Developer.” This type of provider offers a variety of value-added services, including tracking and tracing, cross-docking, specific packaging, order fulfilment technologies that integrate with their customers systems, advanced reporting, and accounting resources. There are fewer of these providers, as service developers must commit significant resources to developing technologies, infrastructure, and processes that give their customers the support they need.

Who Uses 3PLs

A wide variety of businesses use 3PLs for their fulfilment needs.  These include companies in DRTV, Direct Marketing, and E-Commerce.  Additionally, physical retailers who have storefronts, but that don’t keep most products in stock, can also benefit from outsourcing their distribution. And besides retailers, wholesalers and distributors sometimes utilize 3PLs to safely store and secure their products before having them delivered on behalf of their retail customers.  The greatest advantage of a full-service 3PL is that they can make a companies order fulfilment process as easy as the push of a button.  Leading logistics companies in Australia, like NPF for example, have the capability to integrate their fulfilment processes with clients systems.  This means that all work on the retail company’s side completely stops once their customer hits “buy.”   The order is immediately received by the 3PL, picked and packed, and sent out for delivery. And if they’re using one of the very best third-party logistics companies, the retailer will always be able to maintain visibility and control through real-time tracking and reporting.

When Is Using A 3PL Not The Right Choice?

Small “mom and pop” stores normally do not need to utilize a 3PL.  Also some retailers who sell items in-store won’t have use for a third-party logistics company – though there are exceptions to this.  For example, many retailers who sell high-value big ticket items have found that outsourcing their last-mile delivery saves them a great deal of money.  Additionally, many retailers may find that their inbound logistics are simplified when managed by a third-party provider.  If you’d like to learn more about all of the ways a 3PL provider like National Product Fulfilments can create cost savings while freeing you from virtually every aspect of the supply chain process, give us a call at: 1300 882 318 or contact us here.
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