3PL is not the latest “Star Wars” robot character. 3PL stands for “Third Party Logistics,” defined by the Council of Supply Chain Management Professionals as “a firm that provides multiple logistics services for use by customers.”
Typically, a 3PL firm will provide transportation, warehousing, inventory management, packing, and freight-forwarding. A basic 3PL firm will specialize in integrated operations, transportation, and warehousing services. These services can be scaled and customized to meet the customers’ needs based on factors such as market conditions as well as the demands and delivery service requirements for their products and materials.
Using a 3PL can be quite beneficial to a company. Some of the benefits include:
- Administration: You’re very busy. When something needs to be transported, being able to call someone to handle it takes a sizable amount of manpower that would be used in arranging departure and arrival of shipments as well as tracking and frees it up for use elsewhere.
- Access: A 3PL can provide access to many shippers and carriers. Instead of investing your time and money into running them down yourself, a 3PL already knows who to call for what.
- Price Negotiation: A 3PL often has better price negotiation experience than an individual shipper. This means they can get a better price for your shipment than you could if you tried negotiating yourself. It’s a common misconception that by calling carriers yourself, you can cut out the middle man and save money. The truth is that 3PL firms negotiate their contracts usually based on volume. You might be shipping three pallets a week for your one company. The 3PL might be shipping a hundred pallets a week for various companies. The odds are that they will get the better value from the carrier.
- Improved Transit Time: A team that is dedicated to handling your product storage and moving is far more efficient than a team that has to be assembled from your current list of employees, which takes away from your available workforce for a time. With trucks ready to go at the warehouse, you can get orders out to your customers much faster.
- One-Stop Shopping: The convenience of having your supply chain management needs met in one place hardly needs explaining. It also helps on the bookkeeping end when your accounting department doesn’t have to deal with multiple accounts for numerous traditional carriers.
3PL firms contribute greatly to the quality of services of organizations or individuals that make use of their services. Using a 3PL provider like CCC can take an enormous workload off of your shoulders, allowing you to stay focused on other aspects of your business.