3PL Guide: What Is Third-Party Logistics?

Third-party logistics, commonly called 3PL, refers to outsourcing logistics processes. These include inventory management, warehousing, fulfillment, and more.

3PL providers allow businesses to accomplish so much more without investing in the infrastructure to accomplish it. They bring industry expertise and a wide array of tools to get your job done.

When the supply chain, warehousing, and transportation services are integrated, it is referred to as third-party logistics. Now you know!

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If you’re looking to fuel your business with a 3PL company that can take you to the next level but don’t know where to start, that’s okay.

The 3PL fulfillment process is all about making your life easier. So, where do you start with working with one? Read on to find out.

Receiving

A 3PL must receive your inventory to handle the rest of the process. That means you either negotiate shipping rates to their warehouse or work it out directly with them as part of the cost.

Typically, you will provide them with an inventory list, and they will sign off on the incoming items, at which point the real work can begin.

Every 3PL will have their own process for receiving your inventory, but once that’s done you can move to the next steps.

Warehousing

Now that your items have been delivered, they need to store your SKUs in their warehouse. They’ll have more information about their warehouse capacity, security, and access.

We have an underground facility that is protected from heat and humidity, making it ideal to protect your products.

Each 3PL will have different capacities, and not all their space is equal. You should research which 3PL warehouse best fits your products and will allow you to grow as you sell more products—that way, you can scale.

Inventory management

Once stored, a 3PL will manage your inventory, where the real value-added services begin. Now that you’re not paying directly for leasing the storage space, you’re saving but still have real-time access to your product inventory.

At Bennett, we offer real-time inventory management, so you can be confident about our services and your products.

Once your products are in their system, you can compare your warehouse quantity with the number of products you sell per day. This will ensure you have enough product at hand and reduce downtime.

Again, make sure you research the 3PL and their services; that way, you’ll be certain about what you're getting and how it fits into your supply chain plan.

Packing

The next step is packing your orders as requested. This involves assembly lines and automated equipment to pack your items safely and includes packaging supplies:

The most common packing materials:

• Bubble Mailers
• Dunnage
• Packing Tape
• Poly Bags
• Shipping Boxes

The right 3PL can perform a packaging analysis and determine the best packaging materials, shipping box size, and overall shipment strategy to cut all excess costs.

To get the best shipping rates, you must remove as much air as possible from your packaging and the shipping freight itself - otherwise, you're paying for air!

Cutting down on the shipping box itself and creating a strategy to stack the items in freight will give you the best rates and are crucial parts of the process.

Upgrade Your Branding

If you use unbranded shipping boxes and don’t consider the “customer experience,” you risk never creating a connection with your customer and not creating customer loyalty.

We can help create custom packaging for your products that screams your brand! By giving your customers an unboxing experience and using a branded approach to your packaging, you can stay in their minds longer.

The days of a one-size-fits-all approach to your packaging are gone, upgrade today!

Shipping

Now, a 3PL has moved into actually shipping your order.

The best 3PLs will have a variety of carriers and established relationships. They can negotiate the best shipping rate on your behalf, allowing them to compare the costs and find the best rate for you.

They will also need to purchase and print shipping labels for your orders - this is either an included cost or a line item.

They will either send the box to a shipping outlet or deal directly with a carrier, which will pick it up from their warehouse.

Once the order is shipped, a 3PL should have integrated technology to give you delivery notifications - we offer notifications when orders are within a mile.

Now, we can discuss the benefits of a great 3PL. Not every 3PL is created equally, and as I mentioned, it’s worth researching which is the best fit for your needs.

So about those benefits...

Focus On Your Core Business

Your primary focus should always be your product and your business. What if you could actually focus solely on that?

A 3PL focuses on taking your product and handling fulfillment. The best choices are typically turnkey solutions that are also single-source suppliers.

While your focus might be management, developing new products, marketing, or growing your brand in general - a 3PL focus is to develop better and faster assembly lines to give you the best solution, reliable results, and consistent quality.

Imagine spending your time only on your business, improving sales, market share, and efficiencies, and knowing that you had a partner who was helping you achieve all of that extremely efficiently.

3PL Reduces Costs

The biggest benefit of an outsourced operation is reducing your overall operations costs. A great 3PL can take on any packaging request and process it in its own facility. 

3PLs  have already made these infrastructure investments and are ready to work to take your products to the next level. Think through what you would need to get your job done:

• Leasing a location
• Hiring and training a workforce
• Researching and buying equipment
• Applying for and maintaining certification

They can help save products from being damaged during the manufacturing and packaging process. They can fix any components, add new labels, and more.

Have you considered the “hidden costs” that are dragging your bottom line down? Here are a few examples of savings.

Reduce Freight Costs

Moving products between warehouses during packaging and distribution can raise the freight bill by almost 40%.

Lower Inventory Carrying costs

The distribution cycle can take seven days longer and adds extra costs for labor, storage, and carrying that inventory.

Reduce Labor Costs

Multiple teams are required for different roles, and optimization between them is difficult.

Reduce Damage

Most companies that ship products between packagers and 3PLs add costs of about 3% in product damages.

These kinds of hidden costs can disappear with the right contract packaging partner. One that can work with you to hit every delivery you need. 

Leverage A 3PL Industry Expertise

Because a 3PL is focused on one aspect of the business, and they are working with a range of industries, they’re likely to be experts about their entire supply chain, and how they can help yours.

And it’s not just about the packaging itself, often they are experts in the most efficient way to apply labels, tape, and they’re even distribution experts.

They can pinpoint areas for improvement in your business, help you understand your competition's strategies, and maximize your market exposure.

They will go out of their way to source the best products for each operation and will have access to an extensive network of professionals within the industry.

Think about the following questions, do you know the answer?

• Which Shrink Film is best for your job?
• What model of stretch wrapper is right for your line?
• Which tape application is better for my supply chain, hand or automated?
• Can I lower my material costs by choosing a different option?

A Packaging Expert will be able to give you the exact answer.

Less Labor

Labor management is among the most significant factors when choosing the right co-packer. They can handle the hiring, training, and management of the workforce required to package your products, which not only reduces your operational costs but also gives you one phone call to find out the status of your project.

Lower your overhead by eliminating this additional workforce. You don’t need to provide health coverage, wages, or any other costs associated with hiring another employee.

The right co-packer will have a number of talented, trained laborers at their display and available to take on your next project.

Avoid Long-Term Leases

How much free space do you have in your facility? If you could move the production to another facility, you could reuse that space for your core business.

Business is off-peak this time of year - why pay for that space?

If you need to ramp up production and get more products to market, outsourcing can be extremely effective in moving from an internal division or expanding your capacity - all without needing additional space for your business. And the costs will become part of a partnership with your 3PL.

Consider their additional square footage as an extension of your own company.

Access To Resources

Working with a 3PL gives you access to a wide range of resources. They can identify the right resources needed to get a job done, access them easily, and save you all the time needed to enter the market.

We have over 3 decades of experience and have built up a catalog of information, materials, resources, and more to help our customers with their work.

You are growing, but you’re not sure when the right time to take the jump is. That’s normal.

When starting a business, you will typically handle order fulfillment, and incorporating a 3PL is a gradual process.

Here are a few signs it’s time to switch:

Your Sales Are Uneven Or Cyclical

Plenty of categories are seasonal, so if you sell more at certain times of the year, committing to staff or space doesn’t make sense.

A 3PL can scale up and down to match customer demand. They can make a huge push during sales or promotional periods and throttle it back when it’s over.

If your business seems to move like the tide, finding the right partner could help you maximize the selling periods.

Your Space Can’t Match Inventory

When you started out, you had more than enough space to handle your inventory, but now you’re growing, and the pain is real.

When you are struggling to cover storage costs, it’s time to either lease new space or find a 3PL to incorporate into your strategy.

We offer a humidity-controlled underground environment to keep your products safe.

By now, it should be clear why you should partner with a 3PL, but how can you pick the right one?

Yes, they save you money, free up resources, help match customer demand, and allow you to focus on your product, but what if you pick the wrong one?

Gather your current supply chain and make a list of key things you’re looking for in a 3PL—things you can’t live without.

And then do your research!

Bennett is a premier packaging and retail displays manufacturing company striving to protect and promote our clients' products with customized corrugated solutions. When you work with us, you’re part of the family. We will partner with you every step of the way.

With our fully integrated design-to-delivery process, we can be the single supplier source. We are an award-winning manufacturer of virtually anything corrugate. We offer everything from plain brown shipping boxes to sophisticated, high-graphic printed point-of-purchase displays and everything in between.

Talk with our team about your 3PL needs