Third Party Logistics Explained

How Can Control Towers Help With Supply Chain Visibility

Third Party Logistics Explained

A lot of times, when people think third party logistics, they think, “Okay, so someone else moves your product from ‘Point A’ to ‘Point B’,” but it’s so much more than that. In this day and age, 3PL providers have an answer for every logistics problem. Sometimes, those providers can even offer those logistics services cheaper than if companies tackled them on their own.

You can think of 3PL providers as taking up a link (or links, depending on which services you opt to use) in your supply chain, providing continuity and strength in operations more efficiently handled outside of your organization.

Supply chain management in this modern age can sometimes feel like you’re just operating a mishmash of varied software systems: transportation management systems, warehouse management systems, enterprise resource planning systems, inventory management systems, and on and on.

Some 3PL providers specialize in these systems. They help you find the right systems for your operations, implement them, learn to use them effectively, and maintain them. Because of their intensive experiences specifically in logistics, 3PL providers often have great insight into these systems and often even proprietary systems specially designed based on their industry knowledge.

Third party logistics providers who offer transportation services may offer more than moving freight, though getting freight either to your warehouse or its final destination at the best possible price is a common service offered by transportation 3PL companies.

A 3PL transportation provider may be able to offer specialized delivery services, built-in freight insurance, excellent shipping rates, faster shipping than you’ve been able to secure on your own, and supreme tracking capabilities.

Some 3PL providers provide warehousing services, including storage, order filling, inventory management, and shipping and receiving. Some even offer platforms to help you take and manage orders and customer service.

Third party warehousing services are particularly helpful for companies that are growing rapidly, those whose business varies throughout the year, or those looking to expand to other areas without the capital outlay that comes with securing a warehouse and staffing it accordingly.

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Independent research shows that improved supply chain management can yield:

  • 25 – 50% reduction in total supply chain costs
  • 25 – 60% reduction in inventory holding
  • 25 – 80% increase in forecast accuracy
  • 30 – 50% improvement in order-fulfillment cycle time
  • 20% increase in after-tax free cash flows
  • Supply Chain Mapping

  • Review Market Conditions

  • Determine Operational Inefficiencies

  • Outline Opportunities

  • Implement Changes

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