Maximizing Operational Efficiency: How 3PL Services Transform Business Logistics

#### What is it? Third-party logistics, or [3pl](https://controlterrestre.com/glosario/3pl/), refers to the practice of outsourcing logistics and supply chain management functions to external service providers. These providers offer a range of services, such as warehousing, transportation, inventory management, and order fulfillment, allowing companies to optimize their operations, reduce costs, and focus on their core competencies. #### How does it work? Outsourcing to a 3PL allows merchants to focus on other aspects of their business. Instead of managing their own [warehouse](https://controlterrestre.com/glosario/almacen/) and handling distribution internally, they can store their stock in a 3PL provider's warehouse, from where it is shipped directly from manufacturers. When a customer places an online order, items are automatically shipped from the warehouse. This allows e-commerce merchants to focus on developing, marketing, and selling products. For many successful e-commerce companies, they have been the secret ingredient that has allowed them to overcome challenges like supply chain crises. Supply chain disruptions are becoming more frequent and severe due to political instability, natural disasters, human resource shortages, and regulatory challenges. #### **How is the process?** The fulfillment process of a 3PL can vary depending on the provider and agreed services, but generally follows these steps: 1. The 3PL receives inventory at its warehouse and organizes each SKU. 2. When an order is placed on the e-commerce site, it is sent, either manually or automatically. 3. A warehouse team member picks the ordered items. 4. Items are packed with the receipt and order details. 5. The 3PL prints the shipping label or uses one of its carrier partners. 6. The carrier picks up the package and delivers it to the customer. 7. Tracking information is synchronized with the order management system. #### **Differences between freight forwarders, 2PL, 3PL and 4PL** * 2PL: Couriers pick up packages from your warehouse and deliver them to the end customer. * 3PL: An external company stores, picks, packs, and ships inventory. * 4PL: They manage the fulfillment partners (3PL) you work with and communicate between your internal team and the distributor. * Freight agents: Act as intermediaries between brands and drivers. #### **Myths and misconceptions about 3PLs** **"By outsourcing to a 3PL, you lose control."** While it's true that inventory in a 3PL warehouse won't be immediately accessible, working with a 3PL allows you to regain control. Errors are less likely and good 3PLs provide reports and analytics to manage the process remotely. **"3PLs are only for large companies."** 3PLs are designed for merchants of any size with growth intentions, as they can reduce overhead costs and free up capital. **"3PLs have many hidden fees."** While pricing can be complex, fees are not hidden. Asking the right questions before signing a contract can clarify these costs. #### **Three key questions to determine if you need a 3PL:** * Are you fulfilling more than 10 to 20 orders per day? Outsourcing can save time on manual labor, especially if the 3PL uses automation. * Are you running out of storage space? Comparing your current expenses with 3PL estimates can offer better value for your money. * Can your current infrastructure handle an increase in demand? If you need to increase internal capacity or invest in automation, it might be more profitable to outsource fulfillment to a 3PL. #### **3PL advantages:** * Test and launch in new markets with ease. Expanding internationally requires a global fulfillment network. 3PLs can help reduce costs and delivery times. * Free up capital invested in warehouses. By leaving your own warehouse space, you can direct more capital toward revenue-generating activities. * Overhead cost reduction. 3PLs provide trained staff and automation technology without need for your own investment. * Isolation against supply chain disruptions. 3PLs have existing networks and contracts that make them less vulnerable to global disruptions. 3PLs are logistics specialists. By allowing them to manage your shipments and fulfillment, you'll have more time to invest in large-scale strategy. For example, clothing brand CISE experienced an efficiency increase when working with Shopify Fulfillment Network (SFN). #### **3PL disadvantages:** * Initial investment: There can be significant costs when setting up a 3PL provider, such as integrating their software with your online store. * Variable schedules and workflows: 3PLs maintain their own operating hours, which can affect your business. ##### **What services does a 3PL provide?** * Warehouse and inventory management: They offer inventory management solutions and software to administer it. * Order management and fulfillment: A robust order management system that integrates with your software. * Shipping coordination: They work with established carriers or have their own fleet. * Reverse logistics and returns: They manage return and exchange processes. #### **How to choose a provider and how to know what type of service to contract?** Selecting a third-party logistics service is one of the most important decisions when scaling an e-commerce business. The right partner can make or break your company's logistics, customer service, and repeat purchase rate. At Control Terrestre, we understand the importance of having reliable freight intermediaries. By working with us, our clients enjoy benefits like efficient optimization of their supply chains and significant reduction of operational costs, ensuring their logistics needs are effectively covered. With our services, you can focus on growing your business while we let experts handle logistics.