Did you know that the global 3PL logistics market will reach $1.99 trillion by 2028? The Indian 3PL logistics solution market is anticipated to reach USD 61.02 billion by 2030.
Let’s understand what are 3PL logistics solutions. Outsourcing all the supply chain operations, including warehousing, transportation, inventory management, and reverse logistics, to a third-party logistics provider is called 3PL logistics solutions.
Every business prioritizes customers’ preferences first, and the customers want to get the right product at the right time that they order. Unfortunately, when the business expands, it becomes quite challenging to maintain fulfillment and logistics operations. Businesses can solve these issues simply by outsourcing the Third-party logistics solutions provider.
A new businessman or ecommerce startup has to spend money on buying land and building a warehouse to store products. Inefficient supply chain management or inability to invest money in transportation and warehousing can adversely affect customer satisfaction. It can reduce business growth or eat away at profits. Hence, most businesses use 3PL logistics to increase the efficiency of supply chain processes.
What is 3PL in Logistics?
3PL in logistics means outsourcing all the supply chain activities to a third-party provider. A 3PL company handles the packaging, labelling and shipping. Along with this, some 3PL companies offer value-added services like kitting and assembly. They even provide reverse logistics, which is a complex part of supply chain management.
The 3PL service provider has managed shared warehouse, inventory, shipping or value-added services for many years. They are experts in handling complex logistics with ease. 3PL logistics solution providers are equipped with modern technologies like radio frequency identification systems, which increase the visibility of the supply chain.
Key Features of 3PL Logistics Solutions
1. End To End Logistics Management
End-to-end logistics management means handling everything from storing goods and managing inventory to shipping orders and managing returns. 3PL third-party logistics solutions include various logistics solutions such as warehousing, transportation and order fulfillment. 3PL Logistics optimize the complete warehousing and logistics operations.
2. Customizable Solutions
3PL logistics solutions providers offer customizable solutions according to business requirements. For example, it provides brand packaging to increase the awareness of the business in the market. 3Pl can provide cold chain logistics to manage the storage of temperature-sensitive products.
3. Advance Technology Integration
Most of the 3PL companies leverage advanced technologies like warehouse and inventory management systems, as well as data analytics, to increase the efficiency of the supply chain process. Companies also have route optimization technology that helps them to reach customers’ doorsteps ASAP.
4. Global Reach And Network
3PL providers are experts in International shipping regulations and customs clearance. They provide multimodal transportation modes like air, rail, road, and ocean transportation for goods. It allows businesses to expand both nationally and internationally.
5. Risk Management
Logistics delays are quite common in the market. There can be delays in delivering products because of heavy traffic or bad road conditions.
Outsourcing supply chain operations to a third-party logistics solutions provider will also take care of such things. They are experts in handling such risks and will find solutions to resolve them. A business does not have to worry about the risks involved in the supply chain.
6. Scalability
A 3PL provider provides scalability features to businesses. It means the provider will adjust resources when there is demand fluctuation in business. If the business expands in the new market, 3PL solution providers help them to fulfill demand in the new market.
7. Value Added Services
Various 3PL logistics solutions provide value-added services like customized kitting, cross-docking, and consolidation. 3rd party logistics solutions providers also offer custom packaging solutions that help them in branding and better customer experience.
How Do 3PL Solutions Work?
- Understanding Client Requirements – A 3PL solution provider first understands the client’s needs, analyzes the challenges and then provides a plan that optimizes their complete supply chain operations.
- Seamless Integration With the Business – A 3PL logistics solutions provider uses various advanced software to optimize supply chain operations. It tries to integrate with the business through this advanced software. Integration helps increase visibility in the supply chain. The business can learn about its product condition and how it is stored, managed, and transported to customers.
- Warehouse And Inventory Management – Warehouse and inventory management are two crucial elements of 3PL operations. It stores inventories in its warehouse and manages them to avoid issues like overstocking and out-of-stock problems.
- Order Processing – Whenever a customer orders a product, its availability is checked by 3PL provider. The warehouse staff will pick it up, package it, label it, and then hand it to the shipping company.
- Transportation And Distributions – The 3PL company usually uses various modes to transport goods, such as rail, road, air, and ocean. Some 3PL companies use electric vehicles to transport goods and reduce environmental carbon emissions.
- Real Time Tracking – A 3PL provider uses advanced tracking systems to track products in real time. They also offer WMS that provides live visibility on the stock.
- Reverse Logistics – 3PL logistics solutions providers even handle return requests, refunds and recycling, which is a complex part of supply chain management.
Why Are 3PL Logistics Solutions Important?
3PL logistics are important because of various reasons.
1. Cost Reduction
A 3PL company works with numerous clients and shippers. It handles bulk goods for transporting from one place to another. Hence, they can leverage better logistics costs compared to a business that handles shippers individually. 3PL solution providers manage multiple clients in a single warehouse; that is why they offer affordable warehousing costs. Managing a warehouse on its own can be costly compared to 3PL providers.
2. Customer Satisfaction
Today, you will find a lot of logistics companies in India that try to deliver goods either on the same day or the next day. Hence, customer demand has increased now. They want their ordered products to be delivered efficiently as soon as possible.
A 3PL solution provider can cater for this demand by delivering products on time and in good condition to customers through its wide distribution network.
3PL vs Supply Chain Solutions: What Sets Them Apart?
3PL logistics solutions company handles only specific parts of supply chain processes, such as warehousing and transportation. However, supply chain solutions handle broader aspects like picking the product from the manufacturer and warehousing, logistics, and inventory management. Supply chain solutions include strategic planning, demand forecasting, and inventory optimization.
Common Challenges in 3PL Logistics and How to Overcome Them
- A business shares sensitive information with a third party logistics provider, and it can raise cybersecurity issues. The 3PL solutions should use strong access controls to avoid this problem.
- A business has less control over the supply chain operations when it outsources to the party provider. Any disruption or mismanagement can disrupt the entire supply chain process and adversely affect customer satisfaction. The 3PL provider should develop contingency plans or partnerships with various shippers to avoid the issue. It should use data analytics or advanced software so that businesses can track products in real time.
Conclusion
Supply chain management is the backbone of any e-commerce business. Any disruption in the process can decrease the brand value in the market.
However, managing all these processes individually is quite challenging; hence, most businesses need the help of a 3PL logistics solutions provider. There are various 3PL service companies in the market. So consider a few factors like its reputation, and check its reviews and expertise before outsourcing all your supply chain operations to a 3PL provider.
AAJ Supply Chain Management
