The Function of Third Party Logistics Companies

Let’s take a step back and examine the function that third party logistics companies play in the supply chain and business in general. First off, we should define what a third party logistics company, or 3PL, is. A third party logistics company offers all of the supply chain services needed to bring a product from its raw materials to a shelf in the store. This can include distribution, warehousing, fulfillment and so much more.

Function of third party logistics company graph

The purpose of third party logistics companies is to improve the efficiency for shippers in some way.  Whether that be by improving the operations, saving money, or minimizing risk. In short, when you partner with a 3PL your supply chain operations should become simpler for you.

Breakdown of a 3PL’s functions

As mentioned before, third party logistics companies offer many functions that take place along the supply chain. Below is a breakdown of some of the common functions that a 3PL will be able to perform.

Shipping – Shipping is (typically) the primary function offered by a third party logistics company. Whether they are shipping with their own trucks or coordinating to find a carrier for you, a 3PL should be able to ship your freight. This would also include the return process to bring product back the other way against the supply chain.

Warehousing – Warehousing, as the function of third party logistics companies, is used when then shipper needs their product stored for some time but they do not have any warehouses available.  In these cases, they are able to contact a 3PL who can either store product in warehouses that they own or they can coordinate the process to find a warehouse for them. Warehousing can also include additional functions such as receiving, picking, and packing.

Consulting – Consultation is one of the primary benefits of 3PL’s. It takes skill and knowledge to streamline a supply chain to be the best it can be. These are skills and knowledge that 3PL’s have and that they can apply to your company. These typically come in the form of forecasting, analyses, and regular reports that allow you to see your supply chain in a new light.

Certain third party logistics companies will only perform some of these functions while some offer all. Additionally, there are certain cases where a 3PL can go above and beyond. These are typically called white-glove services. It is up to the shipper to identify what steps they would like to get help on.

How these functions help you

Now that we have an understanding of the functions of third party logistics companies we can determine how they can benefit you and your organization.

The best way 3PL’s are able to help their customer is by saving them money in the long run. 3PL’s have the economies of scale on their side and usually have a capacity of thousands of carriers to choose from. This means that they are able to negotiate and find you the best deal for your shipment.

Another way is through reports and regular meetings with your account manager. This is a benefit that is always recommended because as a shipper you should be meeting with your account manager. Your account manager works with shipping all day, every day, and can make data-driven recommendations that can help your supply chain improve.

The last way I will mention here is that by partnering with a 3PL, you can refocus some of your time and efforts into the things you do best.  If you go from handling all of your shipping to hiring a 3PL, you will suddenly have a lot of freed up time that you can now use to focus on the areas of your business you do best. Overall, this should lead to either growth of production or finding streamlines in other areas of business.

If you find yourself in need of any of the functions listed in this blog feel free to reach out to us here at Becker Logistics. With our 23 years in business, we have developed the tools and resources to make sure that each function of a 3PL is performed with quality. You can either contact us directly or request a quote.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>