Today, most customers expect their ordered product to be received within one or two business days. Maintaining logistics activities and all the supply chain processes individually takes a lot of time and effort. Hence, today, most businesses outsource all these activities to a 3PL fulfillment service provider.
3PL Fulfillment, also known as third-party fulfillment, is a service where a logistics company handles all order fulfillment tasks at their warehouse. In simple terms, a 3PL provider receives bulk inventory at their warehouse and fulfills all customer orders on behalf of the business.
What Is 3PL fulfillment?
3PL fulfilment refers to outsourcing a business’s fulfillment of orders and logistics services to a third party. It manages various operations, such as warehousing, inventory management and shipping.
The inventory is thoroughly inspected and kept inside the warehouse in its proper location. When a customer orders a product, the warehouse staff packs and packages it and then ships the Order to the customer’s doorstep. The 3PL fulfilment Company even handles reverse logistics like processing returns and refunds.
Are you running a business and struggling to achieve efficient supply chain management? If so, outsourcing all the supply chain operations would be a good idea.
When Businesses Need 3PL Fulfillment Services?
1. Cost Efficient
Small businesses may not have much money to purchase land and build fulfillment center. They also must spend money on warehouse and logistics equipment, hiring staff, and managing utilities. Spending money at an initial stage of the business can be quite challenging for small businesses. Hence, he may consider outsourcing all these activities to a 3PL fulfilment provider.
2. Technology
Adoption of Technology can better manage inventories inside the warehouse storage. However, it initially costs a lot to invest in new technologies. If a business does not have enough money to invest in advanced technology, then it should take the help of a 3PL provider.
3. New Market
If a business struggles to establish itself in new markets, it should be a 3PL fulfillment company to make various things easier.
4. Order Volume
When a business expands and does not have much space to accommodate products, then it should take the help of a third-party fulfilment provider.
5. Value Added Services
You will need various services to enhance customer satisfaction whenever you do business. One such example is value-added services like customised packaging. If a business cannot provide it efficiently, it negatively impacts customers. If you are struggling with it, you must contact the 3PL warehouse provider.
6. Order Delivery
If you cannot provide the ordered product to your customer in a timely manner, it adversely affects your brand reputation. If you are struggling with it, hire a third-party fulfilment provider.
How To Choose The Right 3PL Fulfilment Partner?
1. Access Your Business Needs
Your first duty is to identify your business goals. For example, analyse your average order volumes and decide whether the 3PL provider cannot efficiently occupy these order volumes. Again, when you expand your business, the 3PL fulfilment company should have enough space to accommodate the products.
You may also require some additional services like kitting or customised packaging. Make sure the 3PL partner you hire provides these fulfillment services efficiently and meets your expectations.
2. Check Technological Capabilities
Ensure that the 3PL fulfilment partner should be leveraged with advanced and modern technologies like warehouse and inventory management systems. These two technologies can track inventories and orders in real time and manage warehouse operations efficiently.
Again, 3PL providers offering data analytics to improve decision-making and enhance customer satisfaction should be considered.
3. Evaluate Experience And Expertise
Select a 3PL fulfillment provider that has enough experience and expertise in your industry. You can check reviews or testimonials to confirm it. You can ask the fulfillment provider about the current clients who operate in your industry.
4. Consider Cost And Contracts
Ensure that the fulfillment company provides a transparent pricing structure regarding storage, transportation and warehousing, customised packaging and labelling and many more services.
5. Verify Their Network
Ensure the 3PL fulfilment provider has a strong network with suppliers and shippers. They should offer extensive shipping coverage and have warehouses in your preferred locations.
6. Compliance And Certifications
You should select a 3PL provider that should comply with local and international regulations. The company should hold various warehousing and logistics certifications and conduct regular warehouse audits.
7. Multi Channel Fulfillment Capability
The 3PL fulfilment provider should be able to handle orders from various places, such as wholesalers, physical stores, and e-commerce platforms. It should support both B2B and B2C channels.
8. Risk Management And Security
You must select a third-party fulfilment provider that should provide insurance on both inventories and shipments. Ensure they have good plans for protecting inventories in case a natural disaster comes. Again, you should evaluate the cybersecurity measures of the third-party logistics. Ensure that the Company has tight cybersecurity to protect customers’ data.
Importance Of 3PL Fulfilment In E-commerce
- A 3PL fulfilment provider maintains almost all the important aspects of supply chain management, like picking, packaging, labelling, shipping, and returns management.
- The 3PL Company delivers the customer-ordered product within one or two days, enhancing customer satisfaction.
- When a business outsources all the necessary activities to the third-party provider, it can focus on core activities like product development and new market exploration.
- A business can save a huge investment by providing all the primary supply chain management activities to the third-party fulfilment provider. It does not have to invest in building warehouses and managing products and staff.
- An e-commerce business can grow much faster without worrying much about the management of the supply chain.
3PL E-commerce Fulfillment Process – How it Works
1. Receiving Order
The customer orders a product from the E-commerce site, which is synced automatically in the 3PL provider system. The provider checks the number of items of the ordered product, delivery address, availability of the product in the warehouse and many other details. It processes the Order after confirming all the required details.
2 . Picking
The warehouse management system helps find the exact location of the product. The warehouse staff then picks up the ordered product from the shelf.
3. Packaging
The warehouse workers inspect the product thoroughly to ensure it is not damaged. They then thoroughly pack the product. If it is a fragile or sensitive product, the staff secures it with bubble wrap or sensitive materials.
4. Shipping
The 3PL provider then determines the cost-efficient route for transporting products to the customer’s doorstep.
Services Offered By 3PL Fulfillment Providers
3PL fulfilment providers offer various services. They are as follows.
1. Storage Services
3PL providers provide storage services where e-commerce companies can store their products in an organised manner. Some 3PL companies even offer temperature-controlled storage where you can store perishable materials or sensitive goods without hampering their quality.
2. Inventory Management
Warehouses store a variety of products. Some may be sent out for customer delivery, while others may still be on the shelf. Identifying them manually can take a lot of time and may lead to errors. In such cases, advanced technology is important in tracking various inventories. An e-commerce business can get real-time visibility of its products and make decisions about reordering. The 3PL Company even uses historical data and trends to avoid overstocking problems.
3. Packaging And Labelling
All 3PL companies provide packaging to keep the products safe during transportation. Fragile products are bubble-wrapped to prevent damage. An e-commerce business may require customised packaging, and 3PL providers may provide it.
Some third-party fulfilment providers even label the packaged product and attach printing or customised shipping labels.
4. B2B And B2C Order Fulfillment Services
It not only handles business-to-customer (B2C) product delivery but also delivers products to other businesses, such as retailers and wholesalers.
5. Shipping Services
It partners with various transport companies and provides ordered products to customers or businesses in one or two days.
6. Return Management Services
Customers may not like the ordered product and place a return request. 3PL fulfilment providers even process the return request and refund the customer. The 3PL fulfilment Company even inspects the product thoroughly; if it is not damaged, it restocks it in its place.
3PL Fulfillment And Inhouse Fulfilment
- 3PL fulfilment providers are usually equipped with advanced technology like warehouse management and inventory management systems. However, in-house fulfilment requires a lot of money to access these advanced technologies.
- A 3PL provider has a strong network with carriers and can deliver products on time to the customer. However, in-house fulfilment can struggle to achieve the same delivery speed as the 3PL providers.
Conclusion
A 3PL fulfillment provider reduces a company’s supply chain management burden and allows a business to focus on core activities like product development. It even reduces the cost of a business. But when a company outsources logistics, order fulfillment, and other supply chain activities, it has limited control over it. Any disruption or problem in the activities can adversely affect the business’s supply chain.
AAJ Supply Chain Management
