What Is 3PL?
A 3PL, or third-party logistics provider, is a partner that helps companies optimize their supply chain and logistics operations. They specialize in services such as inventory management, warehouse storage, order fulfillment, returns processing, and transportation.
You may also hear 3PL companies called by other names:
Fulfillment company
Order fulfillment companies
Fulfillment warehouse
Fulfillment center
Not all 3PLs offer the same services, but their main goals are to serve your fulfillment and warehousing needs so you can streamline your supply chain management.
What does a 3PL do?
A few key roles of 3PLs are to store and manage inventory and fulfill orders. This lets you leverage the cost-efficiencies of a centralized inventory and strategic distribution model.
3PLs also provide transportation services, managing the movement of inventory between various points in the supply chain. This includes coordinating shipments from vendors and customers, optimizing delivery routes, and providing real-time updates.
Some 3PLs can also help you with global supply chain matters, such as import, export, and customs procedures.
Why do you need a 3PL?
A 3PL for ecommerce companies can reduce the operational burdens of running supply chains.
By letting a 3PL handle inventory and logistics, you can focus your resources on growth activities, like identifying new customer bases or developing new product lines.
Some ecommerce companies may also work with 4PLs or fourth-party logistics providers. These providers act as consultants and managers, helping to design, run, and optimize your supply chain and logistics. They may help you source and manage 3PLs, too.
What is
3PL logistics?
Third-party logistics refers to the services described above. But there’s some interplay between terminology here, and it’s helpful to understand it so you can speak confidently about the role of 3PL services at your company.
What is 3PL terminology?
Third-party logistics is a field of operations. It’s the inventory management, order fulfillment, and transportation mentioned above. The term is often abbreviated to 3PL when speaking and writing and mentioned when referring to operations providers.
If your 3PL helps coordinate transportation, you may also hear the term freight forwarders. Freight forwarders manage the movement of inventory and may help provide cost savings.
3PL services
As a service, a third-party logistics company provides ecommerce fulfillment services, taking logistics operations off your hands.
Most third-party logistics services focus on warehouse operations. Your 3PL warehouses probably serve multiple ecommerce companies, reserving or allocating warehouse space for storage of each client’s inventory. Then, as you receive orders, warehouse staff pick and pack products from the warehouse to ship to your customers.