This is part one in a two-part series. You can read part two here.
Whether your business is an eCommerce storefront, a more traditional brick-and-mortar operation or something in between, you’ve probably heard that you need to make a connection with a 3rd party logistics company, otherwise known as a 3PL.
However, if you’re like a lot of small- to medium-sized businesses, you may not think you have enough orders to justify that sort of relationship or even really know what a 3PL can do for your company.
A 3PL is a lot more than just a warehouse—but it can also be just a warehouse if that’s the only service you need. That’s the beauty of a 3PL, really. They’re incredibly flexible members of the supply chain and, for an SMB, a partner that can offer expanding services as you grow.
What Does a 3rd Party Logistics Company Do?
When it comes to the supply chain, it may be hard to imagine what part a 3rd party logistics company plays, but it is actually very important pieces of the puzzle. In fact, effective 3PLs are the reason why so many SMBs are able to compete with huge companies like Amazon that seem to have the corner on super fast delivery.
A 3PL can provide any of these services, and often many more:
Warehousing. Using flexible spaces that are strategically arranged so that your products are selected for the pick floor most efficiently, your products are stored and categorized using bar codes. Most 3PLs will allow you to lease as much or as little space as you need, even if that varies from month-to-month, giving you accordion-like room for your seasonal overflow.
Inventory control. Doing inventory is a terrible job, especially if you have a lot of small products in your catalog. When your 3PL takes over warehousing and packing, they also take charge of your inventory control, freeing you up for other jobs. Using bar code scanning and other technologies, they can report exactly how many of any given item are in the warehouse at any given time. You need only log into your web portal to see your real time inventory status.
Pick, pack and ship. Picking, packing and shipping your items out the door seems like a pretty simple process, but it’s actually one of the most monitored and refined parts of a 3PL. Picking and packing efficiently can cut loads of time off your overall order fulfillment speed, so your 3PL is probably pretty obsessed with this part of the process. They also spend a lot of time thinking about boxes and cartonization, so your package ships as inexpensively as possible.
Product distribution. With your products picked and packed, they’re ready to go off to their destinations, whether that’s around the corner or around the world. Using Cloud-based transportation management systems (TMS), your 3PL will find the best shipping rates and fastest methods to get those deliveries where they’re going to wow both your national and global customers. Those TMS are also handy for ensuring that your replacement inventories get to the warehouse faster than ever, speeding up shipping even more.
Even if you never thought your small business could use the services of a 3PL, you may want to think again. No matter how many orders you have, a 3PL is only going to charge for the warehouse space you occupy and the number of orders they handle, so your budget won’t be overwhelmed for the extra help. Giving you time to focus on bringing in more customers is the biggest reason why 3PL services should matter to you.
In part two of this two-part series, we’ll explore the ways a 3PL can really help your small business do more while spending less.
