What is Third-Party Logistics (3PL)?
Third-party logistics (abbreviated to 3PL) is the management of the movement and storage of parts, products and orders for your business by a skilled partner.
3PL is the use of a dedicated logistics company (often referred to as a 3PL) to deliver elements of distribution, warehousing and fulfilment services on an organisation’s behalf. It can consist of a full range of goods-in, storage, distribution and order satisfaction – so that your business can focus on what it does best and grow faster.
With complex supply chains, just-in-time production, short lead times and high consumer demand, efficient logistics are critical. As more people choose to shop online, it is more important than ever to find cost-effective and efficient logistics.
3PL provides a bespoke storage and distribution solution which helps companies avoiding the time, costs and effort associated with formulating, integrating and managing their own supply chain and distribution management.
By maximising efficiencies and streamlining processes, businesses outsourcing to a trusted 3PL partner can not only be more competitive but can focus more on their own product development and success in an increasingly competitive marketplace.
How Can Third-Party Logistics Help Your Business?
The benefits of using a skilled 3PL provider are numerous but the key advantages are:
1 – Cost savings
Dedicated 3PL providers specialise in reducing costs and taking logistics responsibilities away from the businesses they support
2 – Lower capital expenditure
Using a 3PL provider reduces the need to establish costly warehousing, hardware, staffing, IT and logistics oversight
3 – Greater focus
Outsourcing logistics to a 3PL allows businesses to focus solely on what they do best
4 – Flexibility
As businesses grow, they can rely upon a dedicated 3PL provider to deliver the increasing services they need
Let’s look at some of these benefits in greater details:
Boost Productivity and Grow Faster with Third-Party Logistics
One of the greatest benefits of securing a trusted 3PL partner is that it gives your organisation more time to focus on core aspects of your business and growth.
Receiving materials, distributing components or packaging, supplying production lines, warehousing finished goods, delivering products or fulfilling orders takes a lot of time, planning, infrastructure and resources.
By outsourcing to a trusted 3PL partner, your businesses can grow faster, with less effort – maximising profits with the knowledge your day-to-day logistics are in safe hands.
Cut Costs with Third-Party Logistics
Many businesses have multiple sites or storage facilities, often in different geographical locations. Production, storage and distribution facilities can be gathered overtime and thus lack efficiency.
Any goods-in, storage and goods-out operations require a certain size and focus to be efficient. They require significant capital investment to establish and maintain.
By consolidating logistics operations with a trusted 3PL provider, you can increase operational efficiencies by streamlining your logistics processes. 3PL providers can not only consolidate your storage and fulfilment but help you free assets and reduce capital expenditure by providing all the infrastructure you need.
It’s important to look for a 3PL partner who has flexible solutions so they scale the service they provide as you grow.
Fully Integrate IT and Gain Real-Time Data with Third-Party Logistics
If you are considering a 3PL partnership for the first time, top of your mind may be stock control and order tracking. After all, your strong reputation among stockists and customers is likely based on your ability to dependably deliver what you produce or supply.
By seamlessly integrating with your existing supply chain, warehousing, stock control or order management software and IT, your 3PL partner can provide you with real-time data and complete control.
Modern Warehouse Management Systems (WMS) can provide access to critical data anywhere, anytime, via a user-friendly dashboard. You can manage your inventory, monitor orders and enjoy end-to-end supply chain transparency.
As every company’s requirements are different, we work with our clients to develop tailored integration and accurate reports that work with their existing systems to supply exactly what they need.
Fulfil Your Brand Promises with Third-Party Logistics
With so much consumer choice – and online reviews available at the click of the button – customer satisfaction, loyalty and value are always high on the agenda.
Availability, rather than price, is increasingly consumers’ top consideration when making purchases. Exceptional customer service is not just expected but demanded.
Sub-contracting logistics to an experienced 3PL provider helps improve the throughput of materials and products and ensure they are on shelves or delivered direct to customers whenever needed.
3PL’s can also manage product returns. In the online age, a smooth returns process helps builds brand by enhancing your reputation, customer loyalty and bottom line.
3PL’s can also help deliver consistency with branded packaging and labelling to ensure continuity for your customers. They can also include promotional leaflets, brochures and gift messaging with an eCommerce order fulfilment, contract packing or pick and pack services.
Ensure Legal and Regulatory Compliance with Third-Party Logistics
Establishing, running and maintaining a warehousing, logistics and fulfilment operation is full of challenges many businesses are keen to sidestep.
With a 3PL provider, this is all managed for you by someone else, freeing up your business to focus on what you do best.
A significant consideration when delivering logistics is legal and regulatory obligations, such as health and safety, export regulations and maintaining quality standards.
With a 3PL you will be safe in the knowledge that your supply chain is secure, efficient and that controls and procedures are not only compliant but traceable.
When selecting a 3PL provider, look for key standards and accreditations such as the global recognised ISO 9001 quality standard and the British Retail Consortiums Storage and Distribution standard.
If you plan to export, an Authorised Economic Operator (AEO) complies with the World Customs Organisation’s supply chain standards to streamline and speed up the movement of goods. An HMRC Customs Bonded Warehouse can help defer tax when importing goods or selling alcohol.
What is Fourth-Party Logistics (4PL)?
A fourth-party logistics provider (or 4PL) takes 3PL a step further by not only delivering core logistics but managing resources, technology, infrastructure and even other 3PL’s. A fourth-party logistics provider delivers a total supply chain solution for businesses.
In addition to 3PL, forth-party logistics often also includes:
Inventory planning and management
Inbound, outbound and reverse logistics management
Sourcing of packaging, materials and other inputs
Thorough supply-chain analytics and optimisation
Freight and transport sourcing
Network analysis and design
Consultancy and business planning
Change and project management
Complete network management, coordinating a wide range of suppliers, distributors and other third parties
Fourth-party logistics services go beyond 3PL by offering an even greater partnership, deeper insights and complete strategic and operational management of all supply chain elements. A key benefit of outsourcing logistics to an organisation with absolute expertise is the strategic advice they provide to help achieve any objective your business sets.
Choosing the Right 3PL Partner for Your Business
When choosing a 3PL provider, one of the biggest considerations is how the relationship will meet your business needs now and in the future.
You will likely need a flexible service that scales easily to meet your demand. You will want an experienced 3PL that can be trusted to deliver not only your products but your promises.
Capabilities are critical. Beyond having the facilities, skills and experience to deliver what you need now, a great 3PL partner should be able to provide value-added services like cross docking, pick n pack, transport relationships and reworking.
Here at Johnston Logistics UK, we provide 3PL for businesses throughout the UK including leading supermarkets, high street brands and growing businesses. From our 640,000 square feet site, we process over 1,000,000 individual stock movements each year.
From our experience, clients seek a 3PL to become a true extension of their team and deliver highly efficient and effective logistics they can reply upon. Trust is essential when your materials, goods and products need to be in the right place at the right time.