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3PLs Explained

By March 16, 2023January 22nd, 2024No Comments

Your growing business likely isn’t going to handle fulfillment services in-house forever. As your customer list grows and the number of your orders increases by the day, it’s time to look for a new solution that can free up more of your time and take care of fulfillment for you. If this is the case, it’s probably time for your business to consider the pros and cons of hiring a 3PL partner. 

What is a 3PL?

3PLs – short for third-party logistics – are sometimes referred to as fulfillment warehouses or fulfillment centers and provide logistics and shipping services to their clients. More specifically, they manage the inbound and outbound transport for the businesses that work with them. A few examples of services that a 3PL might offer include warehousing for products, inventory management, picking and packing, shipping and receiving, FTL and LTL freight, and reverse logistics (returns).

E-commerce is a significant industry that relies heavily on 3PL partners. With the rise in e-commerce over the last couple of decades, there has been considerable growth in fulfillment and 3PL. While e-commerce may comprise a large percentage of 3PL business, other industries also use these services – including traditional retail, B2B, raw materials, and wine and spirits. 

For many businesses that don’t have an in-house logistics team, hiring a 3PL partner makes sense. Outsourcing their order fulfillments can help them save money in the long run and focus on growing other parts of their business. 

How 3PLs Work

We know that 3PLs specialize in fulfillment for companies, but what does that mean? Let’s take a look at a general, step-by-step process that explains how 3PLs work.

  1. 3PLs receive inventory from their clients and store it properly in their warehouse or fulfillment center. 
  2. When the client gets an order, the 3PL is notified – either manually or through an automated system.
  3. After getting the order, a warehouse employee will get a picking list to gather the items included in the order. 
  4. The items are packed with a customer receipt and shipping information. 
  5. The 3PL ships out the package to the correct location. 
  6. The customer receives the order.

Pros of 3PLs

3PLs can prove to be a convenient and efficient fulfillment option for many businesses. There are a few advantages to consider – including the fact that someone else handles the fulfillment, the client has a logistics specialist working for them, the business will save money in the long run, there is more opportunity to scale the business, and the client can save time to focus on other things. Fulfillment can be costly and time-consuming, so knowing that there are specialists to do the heavy lifting (literally!) can ease the burden and tedious nature of the fulfillment process for businesses. 

Cons of 3PLs

Of course, while the 3PL solution has its pros, there are also drawbacks to using it as an option. While we’ve mentioned that hiring a 3PL partner can save money in the long run, it can be very costly upfront. If a business doesn’t have the capital to hire a 3PL, it may be best to hold off on outsourcing. Companies also have less control over their product distribution and more distance away from their inventory – which can affect the quality of products for their customers. Additionally, if there are shipping issues, this can reflect poorly on the business, even if it is the fault of the 3PL. That’s why it’s essential to find the right partner, and this can take time. Businesses may not find the right 3PL partner for their needs the first time they hire, which can add additional expenses. 

Logistics Management With UCW

3PLs aren’t the right choice for every business, which is why UCW is an effective and helpful solution for many companies out there! At UCW, we believe in doing the right thing and standing behind our services for our customers. We aren’t your typical logistics solution – we are an asset-light logistics management company that delivers the flexibility of a freight broker with the robust services of a 3PL. Because of this, we can tailor logistics solutions that meet your specific needs. We don’t just offer the fulfillment services that you need to scale your business – we do so with incomparable integrity and an unwavering commitment to our customers. We are focused on you each and every step of the way!

Learn more about the UCW difference