What Is 3PL Logistics?

Principal Logistics Technologies has been at the forefront of developing and implementing cutting-edge software solutions for warehouse management and enterprise resource planning since 1991.   

Our flagship products – ProWMS Advanced 3PL WMS and ProERP Enterprise Resource Planning Software – are designed to enhance your operational efficiency and create new revenue streams for businesses in various sectors.

For full details about what Principal Logistics Technologies can do for you, or to book a demo, please contact us.

You can call us on +353 (0)1 683 33 33 | +44 (0)121 368 0057 or email us at info@principalsystems.com

3PL simply explained

To gain expertise and take advantage of more efficient resources and network connections, warehouses and eCommerce businesses may hire an external 3PL (third-party logistics) service provider to manage any or all of their WMS and supply chain management solutions.

What is the purpose of 3PL?

Strategic control

Partnering with 3PL (third-party logistics) service providers at a specified fee can exponentially enhance your services and operations without sacrificing strategic control.

Although 3 PL service providers do not have a stake, share, or equity in your company, they need to be totally committed to your company’s accomplishments, because that determines their own success.

Enhancing business efficiency

Both inbound and outbound, third-party logistics providers third-party logistics (3PL) solutions are available for an extensive range of value-added services to allow warehouses and eCommerce companies.

This leaves them free to focus on their core business, accomplishing more and employing their resources more cost-effectively.

Extent of 3PL partnering

A 3PL service may be a single provider, or group of separate providers, specialising in a distinct part of the operational process.

Some 3PL service providers offer a comprehensive bundle of complex services, while others focus on specific areas of expertise.

Either way, it is imperative to seamlessly synchronise all the platforms and activities, using an advanced WMS and ERP software solution such as ProSku, ProWMS, ProERP, or ProSCM.

Where do I find out more?

For full details about what Principal Logistics Technologies can do for you, or to book a demo, please contact us.

You can call us on +353 (0)1 683 33 33 | +44 (0)121 368 0057 or email us at info@principalsystems.com

What services are typically offered by 3PL service providers?

Warehousing management software solutions and technology

Software specialists like Principal Logistics Technologies, provide the best available cloud-based SaaS (software as a service) solutions.

This is usually much more cost-effective than setting up and maintaining a sophisticated in-house IT department and you always have access to the latest software and technology.

The benefits include up-to-date software, enhanced security, rapid implementation, cost savings, and instant access to expertise.

What does 3PL Warehouse Management Software do?

System integration

Advanced Saas (software as a service) provided by a 3PL specialist like Principal Logistics Technologies is a cloud-based software solution that seamlessly integrates all warehouse management systems and procedures on a single platform and is compatible with other software systems.

Tailored solutions

WMS software, tailored to individual warehouses and companies’ requirements in modular format, is a game changer that heightens efficiency, streamlines complex operations, lowers operational costs and improves strategic management decision-making through secure real-time data.

Management information, inventory data, tracking information, stock levels and location, and much more are instantly accessible from anywhere at any time on a smart device in real time.

Automation

It automates and integrates functions such as sourcing and procurement, end-to-end tracking, inventory control, receiving, putaway, storage, invoicing, fulfilment, picking, packing, shipping, and delivery.

It interacts and merges with the software used by supply chain partners upstream and downstream for seamless operations and procedures.

The hardware can also be outsourced to ensure access to the latest equipment, maintenance, and lower capital expenditure.

Warehousing and storage

Supplementary facilities

Many eCommerce businesses, manufacturers, importers or exporters, warehouses, and other businesses require large buildings for storage, either as a primary warehouse for their own assets or to supplement their own warehouses at various times in the business and seasonal cycles.

Seasonal or permanent

This might be a permanent arrangement, or to augment storage space at prime or seasonal periods.

The business might either occupy the entire warehouse or share space with other companies to leverage their buying power or meet extraordinary fulfilment needs.

The primary reason for outsourcing warehouse and storage demands to 3PLs is to save on the cost of building or renting warehouse space and to optimise available storage space.

Leveraging economy of scale

In some cases, the 3PL would leverage the buying power of several smaller businesses and distribute the appropriate quantities of products to each.

Financial services and office administration

3PL financial and administration services might include accounting, auditing, freight payment, tracking services, and administrative duties, along with inventory management.

Instead of employing and managing full-time administrative staff, only those services required are paid for.

Smaller and medium-sized companies can outsource these functions to gain expertise and save on staff expenses, yet retain overall control.

Inventory management

Inventory management is a key component of warehouse and e-commerce fulfilment processes and the overall supply chain.

You can either make use of SaaS software to optimise inventory management by accessing real-time data or outsource the entire process to a 3PL service provider to monitor and plan inventory levels and order new stock, especially for offsite storage.

Importing and exporting goods

Several logistics companies specialise in international trade with specific expertise in the processes and procedures required for importing or exporting goods from various countries, which comes with a myriad of legal and customs requirements.

International fulfilment companies

Many warehouses and eCommerce businesses import items or conversely export them, often to customers from all around the world.

Instead of requiring a physical presence in each of the countries, 3PL partners will represent your company and handle all the import or export functions from or to that particular country.

Transportation and freight consolidation

Complexity

In particular, in the case of cross-border or international trade, different types of transportation are required, from air to road, by sea, pipeline, or cyberspace.

The complexity increases when multiple types of goods and inventory are involved, requiring expertise and expensive infrastructure and management systems.

The infrastructure for any form of transportation is expensive and complex to maintain and manage, necessitating outsourcing of this vital aspect of warehouse management and eCommerce fulfilment if the business wants to be successful and grow.

Some businesses rely on a blend of third-party logistics providers, while others use a single 3PL provider that takes care of the entire gamut of transportation from the source to the end user. This is sometimes referred to as 4PL.

Leveraging economies of scale

Shipments for multiple customers are consolidated in a single freight to speed up delivery and save costs.  A 3PL can also leverage other transportation firms to fulfil the duties of its partner.

Maritime transportation services

International trade, in particular, is heavily dependent on maritime transport for larger goods or inventory that is not permitted on aircraft, and many 3PL providers specialise in organising and managing freight transport, often sharing containers among exporters or importers.

Air freight transportation

Unless a 3PL provider takes on the task of shipping goods for a large group of businesses to share shipping costs with, it can become prohibitively expensive for a single company to import and export goods.

Customer delivery (courier services)

The final leg order fulfilment is delivering goods to the end user from the harbour, air terminal, or distribution centre.

Receiving

Particularly for multiple types or mixed goods, your own third-party logistics provider third-party logistics (3PL) company can assist in receiving your products from your domestic or overseas supplier, or your manufacturing facility and enter it into your inventory.

Picking, packaging, and kitting

Customer orders are picked and packed by the 3PL provider in the packaging materials best suited to protect the product during transportation and readied for shipping.

Kitting involves packing individual and unrelated items of stock into a single package and shipping them as a “kit.”

Distribution 

Depending on the complexity, in the distribution stage of the entire supply chain or value chain, it may be more efficient to let a 3PL provider make the products or services available to the customer or business user.

Reverse logistics

This could involve replacing the item, having it repaired and returned to the online store by the customer, or refunding the customer.

The returned item is also dealt with appropriately, including returning it to stock and having it repaired, recycled, or disposed of.

Customer communication

Efficient, professional and friendly customer communication is of the utmost importance to ensure customer loyalty and return business.

In today’s competitive market, there is a growing category of information specialists, including electronic communication, business-to-business communication, and internet marketers.

A specialist 3PL company can successfully build your company image and ensure a smooth fulfilment process.

This communication could start with confirming the order and proceeding through the steps of invoicing, updating the customer on shipping progress, confirming delivery and thanking the customer for business, dealing with complaints or other correspondence, following up on customer satisfaction, and sending future promotional material.

What are the benefits of 3PL?

Why would you consider a 3PL partner?

Consider all the implications of handling your in-house logistics.

What expertise, equipment, and other resources are required? How much will it cost in terms of capital expenditure and maintaining the logistics system in terms of warehouse management, labour, storage, fulfilment, shipping, etc?

How will each step of the supply chain, from sourcing and procurement to final delivery, be handled?

How much of your time, expertise, labour, and other resources are required for each step in the supply chain? What level of control is necessary?

If you can have all or some of the steps done more efficiently or cost-effectively, outsourcing those steps or procedures to a 3PL service provider that specialises in that particular aspect of your business.

Saving labour requirements and costs

A 3PL can save you time and money by scaling your space requirements, labour, and transportation with fluctuating needs, particularly with seasonal demands, and without wastage or superfluous staff and resources that are not used optimally all the time.

They can also reap the benefit of the economy of scale by combining several companies when purchasing or shipping items.

Access to expertise and logistics technology

The top 3PL providers have developed high levels of expertise, an extensive network of contacts lead logistics providers, and specialised software and technology in place to accomplish your logistics objectives most efficiently and cost-effectively. 

You can leverage their expertise to eliminate any weaknesses or limitations in your enterprise to optimise and grow your business, by focusing your expertise on your core business. 

Increase your business capacity

Many businesses start small and as they grow, need to increase their capacity, often at great cost or with great urgency, or else lose business and actually start declining when customers turn to other companies if they cannot meet the demands of the market.

The customer base of many companies will remain limited exactly because they cannot expand their product range, geographical area, or volume profitably. 

Usually, the most cost-effective way to increase your capacity quickly is by outsourcing any aspects of the business outside your core competence to a 3PL provider.

Optimise your business procedures

Partnering with the correct 3PL provider can greatly improve operational efficiency; reduce overhead expenses; eliminate, or at least minimise, wastage and errors; ensure accurate real-time data for efficient strategic decisions; identify and eliminate weaknesses; allow much greater flexibility; rapidly prepare for increased demand during peak periods and reduced demand during low season.

Improve customer satisfaction

Customer satisfaction is at the heart of any business decision and procedure. Operational burdens can easily overshadow customer liaison and communication, especially when resources are limited.

To help you cultivate a positive reputation, a 3PL provider can support accurate order fulfilment and quick turnaround times, enhance customer contact and communication, and assist with reverse logistics to retain customer loyalty.

What are the main types of 3PL providers?

3PL providers come in many different shapes and sizes. Some provide general solutions, while others focus on more specialised ones.

Choose the 3PL partner that will optimise your WMS and enhance your business and client relationships. Usually, the 3PL service providers can be divided into the following categories:

Standard 3PL providers

Standard 3PL companies provide only basic, logistics services such as storing, transporting, and distributing your products.

Service developer 3PL

A service developer 3PL additionally provides support in software and technology solutions, security, and product tracking.

Customer adapter 3PL

A customer adapter 3PLs does not develop new logistics operations but takes over the running of existing in-house logistics operations as a third-party partner.

Customer developer 3PL

A customer developer 3PL takes over the logistics operation of a third-party logistics company and adapts it to their own systems. Their partner company, but they will also adapt their own systems.

Niche 3PL service provider

A niche 3PL provider specialises in a particular industry, range of products or market. This could include cold storage, bulk transportation, handling and packing materials, transporting hazardous or sensitive materials, or specialist packaging.

What is the difference between 3PL and 4PL?

A 3PL third-party logistics provider serves as a fulfilment partner along the supply chain, whereas a 4PL normally acts as a consultant, outsourced specialist, or single 3PL provider that takes full responsibility for end-to-end logistics.

For expert advice and service to match your company’s size and WMS requirements, contact us online or by telephone at +44 (0) 161 888 2580.