What is Third-Party Logistics (3PL) Fulfilment?
If you are looking to expand your business, managing all your logistics may prove to be a big task. This is where Third-Party Logistics (3PL) fulfillment becomes useful.
This service manages everything from product storage to delivery to your customers. Understanding the processes involved in 3PL fulfillment and its cost is essential.
This will allow you to evaluate if it is the right choice for your business.
3PL Fulfilment Process
Understanding the process of 3PL fulfilment begins when your inventory is transferred to the 3PL provider. This third-party logistics company then warehouses your items, ready for distribution.
Upon receipt of an order, the fulfilment services activate. The products are taken from the shelves, securely packaged, and dispatched to the customer. This efficient procedure is designed to save your time and resources.
The outsourcing goes beyond storage and shipping; it includes the expertise of the 3PL provider to enhance your customer service. Understanding this process can help evaluate the value a 3PL provider brings to your operations, enabling an informed decision about which services to use.
1. Receiving
Working with a 3PL provider involves several steps, the initial one being receiving your inventory. The fulfilment provider takes care of this step, from unloading lorries to sorting and storing your goods. Understanding receiving costs is a necessary part of the process as they can affect your profit margins.
These costs include more than just handling fees, taking into account the time and resources put into inventory management.
Warehouse operations efficiency is crucial, with prompt, precise receiving processes avoiding expensive errors or delays. 3PL providers often employ sophisticated systems to simplify these operations, ensuring that your inventory is accurately logged and prepared for the subsequent stages in the fulfilment process. Using a 3PL provider for receiving operations could lead to better supply chain efficiency.
2. Storing
Once your inventory has been correctly received, the subsequent important phase of 3PL fulfilment is storage. A main focus for many fulfilment companies is the effective use of all available warehouse space.
This is achieved with the assistance of a comprehensive warehouse management system, which is used to place your inventory strategically for optimal flow and easy access.
Such systems can amplify operational efficiency and potentially lower storage expenses by identifying and removing any excess space or resources. It’s thus vital to choose a 3PL provider that uses an advanced warehouse management system to guarantee proper storage of your goods, which could result in time and cost savings.
3. Picking
Beyond storage, a critical part of 3PL fulfilment is picking. This is the process where goods are selected from the warehouse storage to fulfil orders. This procedure aids e-commerce businesses by making the fulfilment process more streamlined and managing customer orders effectively.
During picking, the location of your product is identified, it’s then retrieved and prepared for packing. This step is important, particularly when dealing with large volumes of orders. Correct execution helps minimise errors and contributes to customer satisfaction.
Consider a scenario where a customer places an order. The details of this order are sent to the warehouse, where staff then locate and pick the correct items. Accuracy is as vital as speed – incorrect items can lead to returns or dissatisfied customers.
Hence, implementing proper picking methods is necessary for efficient and error-free fulfilment.
4. Packing
After picking your items, the next significant step in 3PL fulfilment is packing. This stage isn’t merely about accommodating your products into a box. It involves ensuring that they’re properly safeguarded and displayed using suitable packing materials.
Your fulfilment associate will meticulously pack orders, keeping in mind the specific characteristics of your products. If they need unique packaging, such as bubble wrap or foam inserts, these requirements are met.
Branded packaging can also be used to improve your customer’s unboxing experience, strengthening your brand’s identity. Every detail is significant in this stage, from the kind of box used to the positioning of your logo.
With your products securely packed, they’re prepared for the last step – delivery.
5. Delivering
The logistics of delivery represents the final phase in the 3PL fulfilment process. This phase involves more than simply shipping orders. It also includes ensuring that these orders arrive at your customers’ locations on time and in optimal condition.
The 3PL provider you select will play a key role in this step. A competent provider can efficiently manage different shipping methods, adapt to changes, and handle any complications that arise. They should also offer tracking services, allowing both you and your customers to stay updated on the delivery progress.
The delivery process is more than just a logistical requirement; it’s a chance to increase customer satisfaction. If executed well, delivery can help your customers feel appreciated and looked after, which can lead to customer loyalty and repeated business.
Therefore, the importance of a successful delivery in the 3PL fulfilment process shouldn’t be underestimated.
How Much Does Third-Party Logistics (3PL) Cost?
You might be curious about the cost of 3PL. The expense isn’t constant and changes based on numerous elements like order volume, storage requirements, and the complexity of services needed. These aspects need to be taken into account when figuring out the cost of 3PL for your unique business.
Some 3PL providers provide a tool to calculate pricing, which can help you get a rough idea of your potential costs.
It’s worth noting that while the initial expense may appear large, 3PL fulfilment can prove cost effective over time, being an investment that helps make your operations more efficient and grow your business.
3PL vs Dropshipping
The differences between 3PL vs drop shipping are significant and understanding these distinctions can guide your decision-making process.
With 3PL, your ecommerce business collaborates with a third-party logistics service. They handle the storage of your inventory in fulfilment centres and manage order shipment. This method allows more control over your stock and results in quicker delivery times.
In contrast, dropshipping involves selling items that aren’t in your physical possession. The supplier is responsible for storage and delivery. While this approach reduces your financial risk, it also results in less control over inventory and increased delivery times.
Next, we’ll discuss ‘what is 3PL distribution’.
What is 3PL Distribution
3PL distribution is a part of the supply chain process where your inventory is stored and orders are fulfilled on your behalf. Your 3PL provider becomes an integral part of your distribution network, managing the logistics of transporting your products from your business to your customers in a timely and efficient manner.
Your 3PL provider oversees the storage, packing, and shipping of your products, which allows you to concentrate on other aspects of your business. Their expertise can assist you in avoiding common distribution complications.
Thus, the intricacy of 3PL distribution shouldn’t deter you as it’s an important tool for a successful e-commerce operation.