3PL Services have taken the world by storm, particularly since the rise in globalisation and the advancing business landscape. In 2017 and 2020, 90% of Fortune 500 companies used third-party logistics (3PL) services, according to Armstrong & Associates. This is because businesses prefer outsourcing their logistics management and order processing to a third party so that they can, meanwhile, invest their energies in growth and success. The blog explores the understanding of 3PL services, their importance, and how can business get benefit from them.
What Are 3PL Services?
Third-party logistics services refer to the outsourcing of logistics and supply chain activities to a specialised provider. It encompasses a broad range of supply chain solutions that businesses can outsource, including warehousing and storage, order fulfilment, freight forwarding, transportation and distribution, inventory management, and reverse logistics(returns processing). By leveraging 3PL services, companies can enhance their operational efficiency while reducing costs and focusing on business growth. Generally, growing and established e-commerce brands, among others, that sell internationally utilise 3PL fulfilment services to handle cross-border shipping, customs clearance, and last-mile delivery without maintaining their own logistics network.
Most Common 3rd Party Logistics Services
As stated above, a 3PL service provider offers multiple logistics solutions tailored to different industries. The most essential 3PL services include
1. 3PL Warehousing Services
First, 3PL service providers offer avant-garde warehousing facilities equipped with futuristic technology like Warehouse Management Systems (WMS). These systems in 3PL warehouse services enable real-time inventory tracking along with secure and scalable inventory storage, reducing the risk of stockouts or overstocking. Additionally, 3PL warehouses often feature secure and scalable storage solutions, protecting inventory from environmental damage or theft. For industries requiring specialised storage conditions, such as pharmaceuticals or perishable goods, many 3PL providers offer temperature-controlled environments.
2. 3PL Distribution Services
In addition to warehousing services, for managing the movement of bulk inventory, 3PL service providers offer 3PL distribution services. These services are designed to transport goods efficiently from warehouses to wholesalers, retailers, or fulfilment centres. Distribution services are particularly beneficial for businesses operating in the B2B (business-to-business) sector, manufacturers supplying multiple sales points, or companies managing multi-location inventory. For instance, a global brand like Unilever relies on 3PL distribution services to ensure its products reach retail shelves worldwide in a timely and cost-effective manner.
3. 3PL Order Fulfilment Services
Likewise, for businesses seeking end-to-end supply chain management, 3PL order fulfilment services are indispensable. These 3PL fulfilment services cover the entire process of receiving, processing, packing, and shipping customer orders. This is especially critical for e-commerce businesses, where timely and accurate order fulfilment directly impacts customer satisfaction and retention. Leading 3PL providers like Kun Fulfilment specialise in e-commerce fulfilment services, handling everything from inventory storage to last-mile delivery. By outsourcing fulfilment, businesses can focus on growth while ensuring a seamless customer experience.
4. Freight Forwarding Services
Moving further, 3rd party service companies also excel in freight forwarding, which involves arranging and coordinating the transportation of goods across domestic and international borders. Freight forwarding services typically include international shipping, customs brokerage, import/export compliance, storage, and final-mile delivery. For businesses importing products from overseas, the 3PL logistics service provider ensures seamless customs clearance and efficient transportation. Hence, businesses that import products from overseas and need seamless customs clearance and warehousing sign up for such 3PL customer services.
5. Inventory Management
Inventory management is a core service offered by nearly all 3PL providers. By leveraging technology-driven solutions, such as AI-powered demand forecasting and stock-level optimisation, 3PLs help businesses maintain optimal inventory levels. According to logistics industry reports, companies that utilise comprehensive 3PL services experience a 25% reduction in logistics costs and a 35% increase in order processing efficiency. Kun fulfilment uses advanced analytics to help businesses predict demand trends and avoid overstocking or stockouts, ensuring a balanced and cost-effective supply chain.
6. Reverse Logistics
Last but not least, returns are an inevitable aspect of retail and e-commerce, and managing them efficiently is crucial for maintaining customer satisfaction. 3PL service providers offer reverse logistics services to handle product returns, repairs, and recycling. This includes inspecting returned items, processing refunds, and restocking usable products. A well-managed reverse logistics process not only enhances the customer experience but also reduces waste and recovers value from returned goods. Almost all global retailers partner with 3PL providers to streamline their returns process, ensuring that customers receive refunds quickly and that returned items are reintegrated into inventory efficiently.
Benefits of 3PL Fulfilment Services
1. Cost Efficiency and Scalability
One of the primary benefits of utilising third-party logistics (3PL) fulfilment services is the significant cost savings it offers businesses. When companies outsource their logistics, they avoid the hefty upfront investments required for warehousing, transportation, and technology infrastructure. 3PL providers operate on a shared-resource model, allowing businesses to pay only for the services they use. This scalability is particularly advantageous for small and medium-sized enterprises (SMEs) or businesses experiencing seasonal demand fluctuations. For instance, during peak seasons like Black Friday or holiday sales, e-commerce businesses can scale their operations seamlessly without worrying about overcapacity or underutilisation of resources.
2. Access to Advanced Technology and Expertise
Additionally, 3PL providers bring specialised knowledge and futuristic technology to the table, which many businesses may not have the resources to develop in-house. Th 3pl companies use technology for automating inventory management systems and real-time tracking and analytics, to optimise supply chain operations. This expertise ensures faster order processing, accurate inventory management, and improved customer satisfaction.
3. Enhanced Focus on Core Business Activities
Outsourcing fulfilment to a 3PL allows businesses to redirect their time and resources toward core activities such as product development, marketing, and customer engagement. Managing logistics in-house can be time-consuming and distract from strategic growth initiatives. delegating logistics to experts, businesses can achieve operational efficiency while concentrating on what they do best.
4. Improved Customer Experience and Faster Delivery
Improved customer experience and fast delivery services are the backbone of the success not only for business but also for 3PL service providers. It also reduces cart abandonment rates, directly impacting a business’s bottom line. 3PL providers often have extensive networks of warehouses and distribution centres strategically located to ensure faster shipping times. This geographic advantage enables businesses to offer same-day or next-day delivery options, which can significantly enhance customer satisfaction and loyalty. For example, Kun fulfilment is a 3pl service provider company that ensures same-day delivery across the UK and beyond, ensuring that customers receive their orders promptly.
5. Risk Mitigation and Compliance Management
Last but not least, navigating the complexities of logistics, including regulatory compliance, customs clearance, and transportation risks, can be challenging for businesses. 3PL providers are well-versed in these areas and can help mitigate risks associated with supply chain disruptions, legal issues, or unforeseen events like natural disasters. For instance, during the COVID-19 pandemic, many businesses faced disruptions in their supply chains. However, companies that relied on 3PLs were better equipped to adapt due to the providers’ diversified networks and contingency plans. Additionally, 3PLs ensure compliance with international trade regulations, reducing the risk of penalties or delays. This level of risk management provides businesses with peace of mind and greater operational resilience.
Bottom Line
In a world where efficiency and cost-effectiveness are paramount, **3PL services** offer a powerful solution for businesses looking to streamline their logistics operations. From warehousing and fulfilment to reverse logistics, 3PL providers are helping businesses stay competitive in an increasingly complex market.
At Kun Fulfilment, we specialise in delivering tailored 3PL solutions that meet the unique needs of your business. Whether you’re in e-commerce, retail, or any other industry, our services are designed to help you cut costs, improve efficiency, and scale effortlessly. Additionally, our 3PL logistics consulting services allow potential customers to better decide how they can leverage our 3PL services and scale effortlessly in today’s dynamic market.
