What is 3PL? How to choose a 3PL provider?

3PL (Third-party logistics) is at the heart of the supply chain, from warehousing to inventory management and order fulfillment. Receiving, storing, and delivering goods are critical components of growth for organizations that rely on these logistics operations, especially when supply chain management can be challenging.

The outsourcing of these specific responsibilities has fallen to third-party warehouse businesses known as 3PLs, or third-party logistics warehouses, as the specialization of logistics functions has become a necessity for many organizations, especially with the rise of e-commerce and omnichannel fulfillment.

  • In this blog I am going to cover:
  • What is a 3PL provider?
  • What are the responsibilities of a 3PL?
  • Benefits of working with a 3PL.
  • How to choose a 3PL provider?

So let’s get started.

What is a 3PL provider?

A third-party logistics (3PL) provider is a specialized company that offers customers a variety of distribution, storage, transportation, and fulfillment services. These customers outsource these types of operations to a 3PL provider and rely on them to provide end-to-end service management. 3PL providers are an important aspect of supply chain management, and the vast majority of large organizations employ them all around the world.

Warehouse and inventory management, order fulfillment, shipping coordination, retail distribution, returns, and refunds are all common 3PL services.

This is for sure, partnering with a 3PL helps a merchant to concentrate on other important aspects of their business.

What are the Responsibilities of a 3PL?

Third-party logistics warehouses handle critical supply chain operations so that their customers can concentrate on growing their business. This refers to anything that happens along the supply chain, including logistics operations such as:

  • Receiving inventory to the warehouse is scheduled and carried out.
  • All inventory is sorted, managed, and accounted for.
  • Keeping inventories in good working conditions.
  • Negotiating lower delivery costs.
  • Product selection, packing, and delivery.
  • Keeping track of recurring subscription boxes.

What are the Benefits of working with a 3PL provider?

Using a third-party logistics company has numerous advantages. The most important advantage is that you may concentrate on other functions of your business, such as sales, marketing, and product development, by outsourcing these services. You will save more time and resources by outsourcing 3PL. Here are a few more benefits:

  • Cost-cutting:

Individual shippers don’t have as much clout with freight firms as 3PLs do. 3PLs can negotiate prices with shippers on behalf of several customers depending on volume and order frequency. When you use 3PL to manage all or part of your supply chain let you focus on other parts of your organization that will help it grow and thrive.

  • Scale up or down as needed:

Demand fluctuates throughout the year for most businesses. By using a 3PL, you can better manage ups and downs without tying up capital when you don’t have to.

  • Enhance the customer experience:

Customers expect same-day or next-day delivery as a given. Using a third-party logistics provider helps you to deliver quick shipment regardless of where the order is being shipped, thanks to the 3PL’s extensive distribution network.

  • Test new markets:

With an international 3PL, you can test the waters in new areas without committing to any substantial investments, such as your own storage space or personnel.

  • Reduce the risk of shipping delays:

Shipping delays can and do occur for a variety of reasons. A 3PL is responsible for arranging additional arrangements to fulfill your orders as promptly as feasible when unforeseen problems arise. You’ll also be covered if your things are damaged or lost.

  • Improve skills and knowledge in the field:

Who better to take care of your logistics than a company that specializes in it, especially if you’re just starting out? Fulfillment, warehousing, and shipping all come with significant challenges. Handing these tasks off to experts can significantly improve the way you work – and allow you to focus on increasing the overall value for your customers.

  • Familiarise yourself with international logistics:

If you sell internationally, 3PLs can take care of documentation, duties, levies, and other issues that pop up at borders that can delay your shipments and cost you dearly if not done thoroughly. You’ll also save time dealing with the complicated regulations of different countries.

  • Inventory Cost savings:

When it comes to warehousing, not having to manage your own space and personnel can save you a lot of money. Inventory forecasting firms can also assist you to improve your inventory levels and saving money on inventory holding charges.

How to choose a 3PL provider?

Choosing the right 3PL provider might be a daunting task due to the vast amount of possibilities available. Furthermore, you must collect precise information regarding the true cost of 3PL for your company.

Here are a few things to think about while selecting a 3PL partner:

  • Current and projected volumes:

Choose a 3PL that can handle your current volume, but is also ready to handle your volume if you suddenly add a bunch of new inventory, increase your stock volume, or have a big sales spike. You should choose a 3PL that can handle your business now and when it’s on a high.

  • Check References and business performance:

Ask for references from other clients who use the 3PL provider and get a report on the company’s performance in recent years. Ask for references and information about on-time deliveries versus delays and how companies are compensated when problems arise. Look at what customers are saying about the company – case studies and quotes from customers are a good indicator of how the 3PL provider has built and maintained customer relationships.

  • Compatible technology:

If you are using a cloud-based inventory management system, choose a company that’s also up to date with the latest technology and integrates with your warehouse management software. Make sure the 3PL vendor’s technology is compatible with the way you work.

Final Thoughts on 3PL Company

Partnering with a third-party logistics provider may seem like a no-brainer by now – it may save your time and money while allowing you to focus on product development, marketing, and business growth.

However, when it comes to selecting a 3PL business to manage order fulfillment for your business, the alternatives can seem limitless.

Finding a fulfillment provider you can trust to manage your inventory, give a great customer experience, maintain high customer happiness, and ultimately help you expand your business is critical.

Still, if you are not able to find the right 3PL partner you can trust AVG Logistics Limited.

AVG Logistics Limited is a multimodal logistics company with over 30 years of experience. We have also grown into a full-service 3PL that offers end-to-end logistics services such as transportation, warehousing, distribution, logistics, fulfillment, first mile, last mile, packaging, etc.

We provide a range of logistics services to esteemed clients, like Nestle, ITC, Mondelez, GSK, Amara Raja, Airtel, MRF, Mother Dairy, UltraTech Cement, Coca-Cola, IGNOU, Patanjali, etc.

You can connect us for any of your logistics requirements.


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Priti is a mompreneur, blogger and digital marketer. She is a co-founder of InfoTalks. Passionate about internet marketing and love to share the same in the form of blogs.

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