Third-party logistics is outsourcing the supply chain operations and logistics to get a company’s products to their customer. The logistics solutions that 3PLs offer include receiving, storing, packing, and shipping services. Some 3PL companies also provide other logistics services, referred to as value-added services. These include inventory management, kitting and assembly, postponement packaging, and others.
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Because 3PL service providers have been managing this kind of logistics for years or decades, they have the expertise and leverage to make the process simpler, quicker, and more cost-effective for the seller. The market for 3PL providers has grown exponentially with the exponential growth of e-commerce. Most Fortune 500 (86%) companies and 96% of the Fortune 100 use services like these. 3PLs have also bloomed thanks to tracking technology, such as radio frequency identification (RFID) and global positioning system (GPS), both of which offer extended supply chain visibility. Meanwhile, internet of Things (IoT) technology has improved tracking metrics for trucking and other carriers.
Third-party logistics services help organizations to focus on their core business and generate high revenue by reducing operating costs. These services also offer value addition to companies for the entire process of the supply chain, resulting in an efficient & effective supply chain. The main survival factors of third third-party logistic market include cost-efficiency of services, company control, and advances in technology.
Third-Party Logistics Process:
- eCommerce platform integration
- FTL and LTL freight shipping and receiving
- Inventory management
- Picking, packing, and shipping
- Same-day shipping
- Reverse logistics
Benefits of Third-Party Logistics:
- Lower cost of goods sold
- Greater flexibility in product sourcing
- More control over your logistics operations
- Faster order fulfillment
- Easier returns processing