It is unknown for sure who coined the term 3rd Party logistics. However, companies began to outsource external and internal logistics services to third parties in the 1970s and 1980s.
With the emergence and expansion of electronic commerce in
the 1990s and 2000s, the term 3PL became ubiquitous, and 3PLs expanded their
services. Incorporating warehousing and transportation services into the supply
chain evolved into what we now call 3rd Party logistics.
What is 3rd
Party Logistics?
3rd Party Logistics or 3PL is outsourcing e-commerce
logistics processes, including inventory management, warehousing, and supply. 3rd Party logistics providers empower e-commerce entrepreneurs to work with the
tools and infrastructure to automate retail order fulfillment.
The 3rd
Party Logistics order fulfillment process
If you are considering working with a 3rd Party Logistics Company
or new to outsourcing shipping, what happens in a 3PL fulfillment center can
feel like a black box. However, the 3PL execution process is not and should not
be a mystery. So, what exactly happens in a 3PL ecommerce warehouse?
·
Reception
3rd Party logistics providers can't ship orders if they don't
have the merchandise on hand. Receiving stock in a 3PL warehouse means
receiving the incoming product and then storing it.
All 3rd Party logistics operators have their own processes
and facilities to receive and store inventory. Thus, for example, there are 3rd
Party logistics companies that need customers to place an order to receive
inventory to know what items they are going to receive and how many units. This
allows them to stay organized and stock up on inventory at the appointed time,
which means they can start fulfilling their orders faster and more efficiently.
·
Storage
Once a 3rd Party logistics company receives an item in stock,
it stores it in their fulfilment centers. All production units have their own
storage space: on a shelf, in a container or on a pallet.
Every 3rd Party logistics has a different storage capacity;
not all 3PL storage areas are the same. A 3PL is different from a warehousing
company that simply collects excess space for you in different warehouses
without managing its execution centers.
·
Compilation
Once a customer places an order, it's time to start the 3rd
Party compliance process. Have you heard the phrase pick and pack before, the
first half?
Certain 3rd Party logistics require you to manually upload
orders to their system. Sometimes they use spreadsheets with order details,
customer delivery details, etc. This can be an inefficient and complicated way
to handle orders.
Other 3rd Party logistics have sophisticated technology that
integrates directly with your e-commerce platform or marketplace. These 3PL
order fulfillment software integrations combine orders, shipments, inventory
tracking, inventory levels, and more in one place to streamline the fulfillment
process for more automated delivery. This requires automatically moving
customers' online orders to your 3PL network as soon as they are placed. When
an order is submitted to your 3rd Party logistics provider, it is assigned to a
pick team.
A summary OF
3rd Party Logistics:
Cost reduction was the main factor that led to the expansion
of external resources for a company. Logistics costs are an important part of companies'
expenses, hence, many companies began to explore external resources to reduce
logistics costs. Companies without the information and resources to manage
their logistics services seek support from outsourced 3PL (3rd Party Logistics)
companies, including services such as transportation, distribution, and
warehousing. Additionally, developments in information technology (IT) further
increased the importance of working with a company with access to new
technologies.
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