The Role of 3PL in Supply Chain Management

The Role of 3PL in Supply Chain Management

In recent years, global trade has seen immense growth due to the rise of technology and globalization. Most businesses had already shifted online especially during the pandemic when almost everyone was at home. But even before that, businesses have been looking for ways to expand their global reach, and e-commerce has been able to do that. However, while this expansion brought significant profits for businesses, it also brought challenges for them, one of which concerned their supply chain management.

A supply chain refers to the production and distribution of products to end consumers. This system includes sourcing raw materials for a manufacturer, product development, warehousing, and shipment. It may sound simple but in reality, it is a complex process that involves different players working together to keep it moving. Any disruptions at any point will only result in delays and additional expenses which are not ideal for your business. This is why your supply chain must be optimized according to your business to maximize results and lower costs.

While a company can manage its supply chain, many choose to get the services of a 3PL to make the most out of the process.

What is a 3pl?

A 3pl or a third-party logistics company is a service provider that offers a systematic approach to handling the supply chain of a business. They find the most efficient solution to streamline your business processes and maximize the benefits. Large businesses partner up with a 3pl company because they have a constant high number of orders that needed to be moved quickly. That does not mean that small businesses would not benefit from using a 3pl as well. In fact, it is better to get a 3pl because their services would be beneficial when scaling their operations and assure them that their business would not be disrupted.

Businesses want the flexibility 3pl services can provide them. Their services include warehousing, order fulfillment, and shipment. These three aspects of the supply chain are the core of your business and will determine your success and contribute to your customer’s satisfaction. Other services offered by 3pls are:

  • Assembly
  • Packaging
  • Customization
  • Cross-docking
  • Reverse logistics
  • Returns processing

As you can see, a 3pl is a one-stop-shop solution for the supply chain management. It’s no wonder businesses take advantage of this because it streamlines all processes from start to finish. Instead of in-house warehousing and distribution, products from your manufacturer or supplier will be shipped directly to your 3pl partner. This setup allows you to focus more on other aspects of your business such as marketing and promotion.

Benefits of a 3PL in supply chain management

Large businesses have more reasons to engage in a partnership with a 3pl and small businesses might hesitate on getting their services but we will discuss why all business sizes can benefit from it:

  1. Save on costs. Using a 3pl lets you save more on infrastructure costs, transportation, and labor costs since you will be getting all the services in just one place unlike if you manage your supply chain in-house. 3pl companies have an extensive network they can tap into and negotiate the terms until they find the best prices. They may also give you discounts especially if you have high-volume order.

  2. Partnering up with experts. 3pl companies are experts in supply chain management. Global trade has become very complex and will continue to do so and 3pl companies have the knowledge and experience to adjust accordingly to the changing landscape. They also have knowledge in dealing with important matters such as customs clearances, import and export documentation, and economic regulations.

  3. Helps in scaling operations. It doesn’t matter if you are only a small business at the moment. You will never know if you suddenly experience a surge in orders and a 3pl can easily adjust to your needs without spending additional storage costs. It is normal to experience fluctuations throughout the year so having a 3pl is a more cost-effective solution unlike if you are only doing inventory in-house. They are also more flexible and able to utilize all their resources to adapt to your current business needs.

  4. Diving into new markets. At some point in your business journey, there will come a time when you will be presented with an opportunity to expand into new markets. You may or may not push through with it but if you do want to see whether you can establish a presence in a new market, your 3pl partner can guide you. International markets have a different landscape with different legalities and a reputable 3pl company can help you test out the waters without having to spend more money on infrastructure.

  5. Reduce the risks. By getting the services of a 3pl, you are already reducing the risks you might encounter throughout the supply chain management process. You might inevitably experience problems or delays in shipment but a 3pl partner can address the issues promptly due to their experience and expertise. They already have a system in place that they can adjust if any unforeseen problems arise. They know what measures to take in order to keep the supply chain moving.

  6. Improve customer experience. The goal of all 3pl services is to meet the expectations of your consumers. Customers love fast deliveries and reliable customer service which can be attained with the help of a 3pl partner. When your customers are satisfied, your brand image will improve and you can build credibility along the way.

Managing your supply chain can be quite complicated, especially for small businesses that do not have the resources to do it on their own. Not all business owners also know the ins and outs of an international market so they would need a helping hand to establish their presence. With a 3pl, even small businesses get the chance to run their operations smoothly and upscale their operations in the long run. 3pl providers offer comprehensive management solutions by using the best practices and the latest technology to keep the supply chain moving in this fast-paced industry.

Change your business for the better

Whether you are looking to reach out to new markets or just keeping your supply chain in line, you are going to need a reliable 3pl partner by your side. E-commerce is continuously growing and it is not slowing down soon. If you want to succeed in this grueling landscape, you have to ensure that all your business processes are properly executed to reach the ultimate goal of satisfying your customers.

Lansil Global is a 3pl provider that is committed to giving you the best services to streamline your logistics process. Send us a message and we will help you find the right approach to reaching your goals.