What Is 3PL and What Can It Do For You?

01 August 2024

3PL providers offer a range of services to help businesses manage their logistics more efficiently. Here, we’ll take a closer look at what 3PL is, how it works, and its advantages and disadvantages.

Let’s dive in and see just how 3PL can help you!

What is 3PL, Exactly?

3PL stands for Third Party Logistics. Think of it as outsourcing the logistics functions of a company to a specialized service provider. They can do everything from arranging pickups to tracking shipments, storing products, distributing them, and even managing inventory levels.

Everything related to getting your products from point A to point B is taken care of so that you can focus on other areas of your business.

Now, you may have also heard of 4PL providers, but what’s the difference? 4PL providers offer a more comprehensive logistics solution and act as a single point of contact, coordinating all aspects of your logistics across multiple 3PL providers. Essentially, they manage your entire supply chain to ensure that everything runs smoothly.

For most small to mid-sized businesses, 3PL is more than enough to cover their logistics needs.

What Functions Can 3PL Providers Offer?

The functions of 3PL providers are as diverse as your business needs. Here are some of the most common services that they offer:

  1. Transportation Management: 3PL providers can help to manage your transportation needs, negotiate with carriers, and make sure that your goods are transported safely and punctually. No need to stress over documentation or tracking your shipment—they’ll take care of it for you!
  2. Warehousing: 3PL providers can provide storage for your goods and handle the logistics of getting them in and out of the warehouse. They can also offer value-added services like packing, labeling, and assembly.
  3. Distribution: 3PL providers can manage the distribution of your goods, ensuring that they are delivered to your customers on time and in good condition. They can even handle returns and manage reverse logistics.
  4. Inventory Management: 3PL providers can manage your inventory levels and handle stock replenishment. They can provide real-time visibility of your inventory levels, allowing you to make better decisions about when to reorder. You’ll never run out of stock or order too much.

 

Advantages and Disadvantages of 3PL

It goes without saying that there are both advantages and disadvantages to using 3PL providers. Let’s take a look at what they are:

Advantages:

  1. Cost Savings: 3PL providers can negotiate better rates with carriers and suppliers thanks to their economies of scale. By outsourcing your logistics, you can take advantage of these cost savings and reduce your overhead.
  2. Expertise: 3PL providers are logistics experts, which means they can handle the complexities of logistics more efficiently than most businesses can on their own. They have the knowledge and experience to manage logistics effectively, reducing the risk of errors or delays.
  3. Scalability: 3PL providers can scale their services up or down as your business needs change. This allows you to adapt to fluctuations in demand without having to invest in additional logistics infrastructure.

Disadvantages:

  1. Loss of Control: Outsourcing your logistics means that you are giving up some control over how your products are managed and delivered. While 3PL providers are experts in their field, they may not be familiar with your products or your business, which could lead to miscommunication or mistakes.
  2. Communication: This is crucial in logistics, and outsourcing your logistics to a 3PL provider means that you’ll be relying on them to communicate effectively with carriers, suppliers, and your customers. If there’s a breakdown in communication, it could lead to delays or other issues.
  3. Dependency: When you outsource your logistics to a 3PL provider, you become dependent on them to manage this aspect of your business. If there are issues with the 3PL provider, such as bankruptcy or a major outage, it could have a significant impact on your business.

 

When to Use 3PL

So, when is it a good time to consider using a 3PL provider? Here are some scenarios where using a 3PL provider makes sense:

  1. You’re experiencing growth: If your business is growing rapidly, managing logistics in-house can become overwhelming. This brings us back to scalability. A 3PL provider can help you scale your logistics operations quickly and efficiently.
  2. You’re expanding geographically: If you’re expanding into new markets, a 3PL provider can help you navigate the logistics of shipping to new locations. They can help you navigate regulations, customs, duties and taxes, and other logistics-related challenges.
  3. You need to reduce costs: If you’re looking to reduce your logistics costs, a 3PL provider can help you negotiate better rates with carriers and suppliers. They can also help you optimize your logistics operations to reduce waste and increase efficiency.
  4. You need to focus on your core business: If logistics isn’t your core business, managing it can become a distraction from other important areas. By outsourcing this to a 3PL provider, you can focus on what you do best and leave it to the experts.

 

Finding The Right 3PL Provider

If you’re considering outsourcing your logistics to a 3PL provider, it’s important to choose the right one. Look for a provider with experience in your industry and a track record of success. Additionally, make sure they offer the services you need and have the capacity to handle your logistics operations effectively.

As one of the top international LCL and FCL freight services providers in the region, FM Global Logistics has been a leader in enabling manufacturers and brands to significantly enhance their logistics operations since 1988.

With FM Global Logistics, you have the flexibility of scaling your warehousing and logistics operations according to your business requirements. Our warehouses are located around the Klang Valley, Johor and Penang with a total space of approximately 822,000 square feet.

Looking for a new fulfillment partner? Speak to us today about our customized warehousing solutions for both B2B and B2C.

At the end of the day, 3PL providers can be a valuable asset for businesses looking to streamline their logistics operations and reduce costs. With their expertise and experience, they can help you navigate the complexities of logistics while freeing up time and resources to focus on other important areas of your business.