Outsourcing business activities to an experienced partner can often give a company a competitive advantage and allow them to focus more on their own core competencies. This can be especially true when it comes to fundamental operations like warehousing and fulfillment.
Most larger companies outsource their fulfillment to third-party logistics (3PL) providers. Small and medium-sized businesses are increasingly doing the same to take full advantage of the experience that a 3PL can bring to their company. It may seem like a large jump for a smaller business to outsource fulfillment and logistics, but it doing so can help increase sales growth and provide a market differentiator to help stay ahead of the curve.
A third-party logistics company (3PL) is a logistics provider to that businesses. can outsource things like warehousing, packaging, and order distribution to. A 3PL is a company that works with a large network of other types of companies and providers think of everything from software to shipping. That means they can offer a vast array of these essential services to retailers, so those businesses can get what they need from a single point of contact. Basically, think of a 3PL partner as an outsourced resource for inventory management, warehousing your products, packing them up, and shipping or trucking them to your end customers.
Why do businesses use 3PL?
Here's the most straightforward answer to that question: Because logistics operations are complicated, a 3PL saves a lot of stress by managing the logistics process for their customers.
For example, when a company has increasing demand and needs more warehouse space (but can't secure or expand their own warehouse), working with a 3PL can help them fulfill those orders in a streamlined and oftentimes cost-effective way. That's why it comes as little surprise that a whopping 90% of Fortune 500 companies use a 3PL provider.
This story is from the October 2022 edition of Food & Beverages Processing.
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This story is from the October 2022 edition of Food & Beverages Processing.
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