What Is 3PL, Definition & 3PL Logistics Process?

3PL, also known as Third-Party logistics, is a company that handles all supply chain operations for a business. Today, customers want their ordered products delivered efficiently and as soon as possible. Customer satisfaction is the top priority for small, medium, and large enterprises. 3PL companies handle all these activities efficiently and make order fulfillment easy for a business.

However, managing 3PL logistics processes such as inventories, shipping, and on-time delivery can be challenging for any business, especially during holidays or peak seasons. Mishaps in 3PL logistics operations can decrease a business’s brand reputation and profits. To address all these challenges, businesses outsource their supply chain operations to a 3PL.

Growth in e-commerce Companies and increasing demand for fast order delivery have led to a spike in 3PL services in India.

What Is 3PL?

A 3PL company manages a business’s entire supply chain, from warehousing to fast order fulfillment. 3PL offers secure and flexible warehouse space; it stores products appropriately and ensures they are well on hand to be shipped as required. While this can often become confusing and convoluted, many companies prefer to hand over their 3PL logistics process to a Third Party Logistics (3PL) provider to save time, cut manpower costs, and boost efficiency. When this happens, businesses can concentrate on their primary tasks, including selling or producing, while the 3PL partner manages your stock management, shipping and order fulfillment.

The 3PL service includes warehousing, inventory management, shipping and returns. Some 3PL service providers even offer value-added services like kitting or custom packaging. These providers have years of experience handling these services.

3PL companies are booming in the Indian market today mainly because of the adoption of technology such as warehousing and inventory management software, radio frequency identification systems and others.

3PL Logistics Process -Step By Step Operations Involved In Third-Party Logistics (3PL)

1. Inward (Inward Logistics)

Inward, also known as inbound logistics, is the first step in the 3PL logistics process. It involves receiving shipments, checking their quality, storing them and updating them in the system. Let us discuss each step in detail.

• Receiving Shipments: The first 3PL process involves unloading the goods or products from the trucks or containers.
• Quality Check And Inspection: The goods are checked and inspected thoroughly to identify any defects or damage. The damaged products are returned to the supplier. The staff visually inspects each product for damages. Barcode scanning may be done to confirm the product details.
• Inventory management: The inventories are kept in their respective places based on demand and warehouse layout. Temperature-sensitive products are stored where they can maintain a particular temperature without hampering quality.
• Data Entry And System Updates: The last step involves updating the inventory records in the warehouse management system and Enterprise resource planning.

2. Storage And Inventory Management

Storing goods in the right condition and right place is the 2nd 3PL logistics process. The storage location is essential for fast ecommerce fulfillment. Let’s understand the steps involved in the 3PL storage process.

• Slotting And Organization: The products are organized based on their size, demand and storage requirements.
• Stock Monitoring: Inventories are tracked in real-time by using the latest technology, like warehouse management systems.
• Replenishment Planning: The stock levels are analyzed, and then the warehouse service staff decides when to reorder products from the manufacturer or seller.

3. Order Processing In 3PL

Order processing in 3PL is the most critical process of supply chain management.

• Order Receiving: Product orders are received through various platforms, such as ERP or warehouse management systems. The system checks product availability and assigns the nearest warehouse and fulfillment center to fulfill the order quickly.
• Picking & Packing: The ordered product is picked from its shelf and packaged properly so that it will not be damaged during transportation.
• Labelling & Documentation: Shipping labels and invoices are printed and attached to the packaged product.

4. Outbound Logistics In 3PL

Outbound logistics, also called the outward process, refers to the movement of goods from a warehouse to the customer. In this 3PL logistics process, products are picked, packed, and dispatched for shipping. It also includes tracking shipments and confirming deliveries to ensure orders reach customers on time.

• Shipping And Dispatch: The packaged order is handed over to the shipping companies and loaded into the vehicle. The system generates an estimated delivery time and sends its update to the customers.
• Tracking & Visibility: Real-time GPS tracking will allow businesses to monitor their shipments.
• Delivery and Confirmation: The packaged order is delivered to the customer’s address. Proof of delivery (POD) is collected through OTP or signatures.

5. Return And Reverse Logistics

The Return Process must be easy and flexible because it directly impacts customer trust. When returning a product is hassle-free, customers feel more confident shopping again. A smooth return experience increases the chances of repeat purchases and helps build long-term customer relationships.

• Return Initiation: The customer may not like the ordered product because of damage, defects or sudden change of mind.
• Inspection And Sorting: The returned items are inspected and either restocked, disposable or recyclable.
• Inventory Reconciliation: The restocked items are again updated in the inventory system.

Challenges in 3PL Processes And How To Overcome

There are multiple challenges companies can face during the 3PL logistics process, such as supply chain disruption, less control of operations, delays in delivery and mishaps in inventories. So, choose the right 3PL company that provides flexible and error-free logistics solutions. Let’s explore some major challenges:

1. High-order volumes in peak seasons can slow down the picking and packaging process, leading to delays in the order fulfillment process. In such cases, an automated or robotic picking system can speed up the order fulfillment process.
2. Fuel costs can rise with time. Choosing inefficient routes can even raise logistics costs.
3. Deliveries can be delayed due to factors like traffic congestion, bad weather, supply chain disruptions, or mismanagement in logistics planning.
4. Returns is the most important 3PL process in supply chain operations. Managing product returns efficiently can be complex and costly. A poor return process can impact customer satisfaction and increase operational expenses.

Benefits Of Outsourcing 3PL Logistics Process

Outsourcing the 3PL logistics process has many benefits. We are listing them below.

1. Cost Savings

Building warehouses, paying utility bills, managing staff, and buying heavy equipment require a large investment, which is not possible for many small and medium enterprises.

A 3PL logistics service provider offers warehousing facilities where a business can store goods and products at an extremely low warehouse cost. Again, 3PL services negotiate better rates with carriers as they ship bulk products, so businesses can save shipping and logistics costs when outsourcing the supply chain operations to a 3PL provider.

2. Focus On Core Business

A business can outsource all 3PL logistics processes, such as warehousing, transportation and return logistics. This frees time to focus on core activities like product development and exploring new markets.

3. Access To Advance Technology

3PL providers warehouses are usually equipped with modern technology, such as WMS and real-time inventory management systems. It increase the efficiency of warehouse operations.

4. Scalability

The 3PL provider’s modern warehouses are usually scalable, which means it can scale its operations according to market demand.

5. Enhances Customer Experience

3PL providers deliver the ordered product to customers in less time. A smooth 3PL logistics process increases brand reputation in the market and enhances customer experience.

Conclusion

Third-party logistics service providers play an important role in a business’s supply chain operations. Managing all your 3PL logistics processes smoothly can lead to a profitable business. They reduce cost, improve efficiency and enhance customer satisfaction. However, choosing the right 3PL company requires careful evaluation of factors such as expertise, experience, technology adoption, scalability, and more.