What Is Third Party Logistics?

Posted on January 20, 2016

What Is Third Party Logistics?For any company for which production or manufacturing is key, third party logistics services are often a smart option for an effective business model. In order to consider it as an option though, of course, understanding of what third party logistics looks like and how it works is essential.

Third party logistics (often abbreviated 3PL or TPL) refers to outsourced logistics services.  In essence, any business that deals with physical products could work with a 3PL provider to manage their shipping, delivery, or storage needs – and more.

What services are included in Third Party Logistics?

Logistics refers to any sort of management of movement of resources – basically any service that involves storage or shipping. So, a 3PL provider could provide anything from storage to shipping to a full-service system of supply chain management. Different providers offer different types of service, and some companies even work with multiple 3PL providers for the most effective service.

The main two categories of providers are Asset-Based and Non-Asset Based providers. Asset-Based providers own or have strong relationships with the equipment you need – like warehouses that own or have strong relationships with trucking and rail companies. Non-Asset Based companies focus more on organization and management, without their own storage and shipping equipment. Examples of non-asset based services include transportation management services and software, and shipping organization. Cerasis provides a detailed list of the different types of 3PL providers.

In practice, you’ll want to choose a 3PL provider that works well with you and offers the space, storage options, and labor your business requires. You’ll work together with your provider to create a system that will take care of your needs so you can focus on other pressing parts of your business. Whatever your storage, shipping, or supply chain needs, 3PL companies provide professional service you can count on to handle your logistics for you.

Why use a 3PL provider?

Various types and sizes of companies choose to use 3PL services for many different reasons. Smaller and newer businesses may not have the budget or skill set to manage the movement of their products. Well-established companies may find it easier or less expensive to export their logistics rather than managing it in-house. Businesses often don’t have the space or resources in their own facilities for warehousing and shipping, and many companies simply prefer to keep their attention on other business functions – like manufacturing, production, and customer service – by outsourcing logistics.

Because third party logistics providers will work with their clients, companies don’t have to relinquish control by hiring a 3PL provider – just the stress, time, and expenses of managing it themselves. A good provider will work together with its clients to create and maintain a system of shipping, storage, and/or order fulfillment that makes both parties happy, and will provide service you can trust.

Third party logistics companies specialize in movement of resources, which makes outsourcing an attractive solution for logistics needs. While your business may have several functions and products 3PL providers are fully focused on providing support for logistics – so they’re (hopefully) bound to know the industry well. Hiring experts can make running a business much easier and less stressful than managing everything in-house, and an established provider will communicate well with you, know how to fulfill your needs, and offer expert opinions.

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