What Is a 3PL?

What Is a 3PL?
3PL stands for third-party logistics, which is the process of outsourcing logistics management activities to an organization specializing in solutions across the end-to-end supply chain network. Third-party logistics providers specialize in supply chain operations like transportation and warehousing that can be customized to meet customer needs based on market conditions.
3PL solutions often include fulfillment services like receiving, freight shipping, inventory management, warehousing, and related services. Third-party logistics providers often support value-added services during the production and procurement of goods.

What Are Types of 3PL Providers?
The 3PL provider offers order fulfillment services, commonly for eCommerce companies. Different types of 3PL providers offer specialized services within the supply chain network. A 3PL’s services can have a singular focus, or third-party logistics providers can provide numerous activities required to support a customer’s needs.

Common 3PL solutions include:

• Shipping/Receiving
• FTL freight shipping
• LTL freight shipping
• Reverse logistics
• Warehousing
• Order processing
• Kitting/customization
• Picking/packing
• Inventory management

A logistics 3PL provider may offer additional services, such as:

• Processing returns
• Order customization
• Customer service

What Solutions Do 3PLs Provide?

While third-party logistics providers can support a variety of logistics management activities, the top 3PL solutions include:

• Inventory Management: Visibility into inventory and the ability to manage it.
• Split Inventory: Distributed inventory between different warehouses.
• B2B and DTC Fulfillment: Managing both B2C and B2B types of fulfillment for multichannel logistics.
• Kitting and Customization: Custom packaging, notes, or other personalized experiences.
• Fast Shipping: Offering two-day and free shipping options to satisfy customers.
• International Fulfillment: Scaling to global markets.
• Returns Management: Handling returns and returning items to inventory.
• Analytics: Offering analytics tools to track data and gain insights.

When to Use a 3PL

Third-party logistics organizations are helpful for smaller shippers and eCommerce businesses that may need help to handle all of their operations in-house. For instance, owning and managing a warehouse and taking care of all aspects of fulfillment is difficult, especially without a lot of capital or employees.

A 3PL makes logistics more possible for many businesses by storing inventory and providing numerous logistics services. Merchants can manage their part of the business without worrying about this aspect, as they outsource it to a 3PL.

3PL vs. 4PL: What’s the Difference?

Both 3PLs and 4PLs cover logistics and fulfillment outsourcing. While a 3PL handles specific logistics activities for a merchant, a fourth-party logistics (4PL) organization manages the entire supply chain.
Often referred to as a lead logistics provider, or LLP, a 4PL may manage different partners and other 3PLs for a customer, handling aspects like technology, fulfillment, and transportation.