Notes

3PL - Improve Your Inventory Efficiency And Control Costs

In logistics and supply chain administration, 3PL refers to the use of third-parties by a company to fulfill requirements for its supply, warehouse, and fulfillment. This includes services from manufacturers, distributors, brokers, agents, wholesalers, retailers, and others. These entities are established to deliver delivery to the client without having to perform the physical tasks necessary for that service.


In warehousing, a 3PL company is also defined. It is an agent that brings the finished goods to the customer for them to be purchased. Warehousing is often seen as a final stage in the supply chain process, but it should not be thought of as the end of the line. Instead, it is the beginning of the next stage of the process. An example of a 3PL provider would be the manufacturer who ships raw materials, builds the components, and then brings the finished product directly to the customer.


There are many uses for 3PL providers. Many of these businesses require the delivery of raw materials at an affordable cost. Other 3PL providers are service providers who focus on warehousing needs. Others are logistics providers who provide truckload and truck driver transportation services. There is a great need for cost reduction across all of these services, especially since most manufacturers and distributors have warehouses with many employees.


The use of 3PLs often results in logistics services that include freight consolidation. For instance, if a manufacturer has warehouses that house thousands of pallets of merchandise, but only a few sales representatives are available to process those pallets on an ongoing basis, that manufacturer will incur additional transportation costs. A 3PL will often work with a logistics services provider to provide the manpower to warehouse the inventory and fulfill orders. Because the logistics services are performed internally, they do not incur any additional shipping costs or require the purchasing of more pallets.


In addition, many 3PLs are involved in warehousing. Warehousing requires considerable investments in equipment, floor space and staffing. By contracting with a 3PL, a manufacturer can reduce the capital expenses associated with warehousing, which translates into higher gross margin. It also allows for expanded territories, as well as the ability to service new markets.


As customers expect faster shipping times and greater flexibility when it comes to their products, they are willing to pay more for those products. If they have to wait two or three days to receive the product they want, they will opt to purchase elsewhere. That means that some customers expect quicker shipping and same-day shipping options. A 3PL can offer same-day shipping in order to fulfill those desires. They can also offer next-day shipping if a customer expects that the product will ship within a few hours of their purchase date.


If you have an e-commerce fulfillment center, then you are well aware that it is very important to maintain adequate levels of inventory. You need to have enough of a supply of the product that your customers will be happy with the purchase decision made by you. However, if you don't maintain adequate levels of inventory, you run the risk of losing potential customers to competitors who have access to the same products that your competitor has. In order to avoid such a loss, your 3PL services should regularly stock inventories. In addition, 3PL services that provide on-demand inventory maintenance and replenishment will also help you meet your inventory needs.


To maintain effective levels of inventory and ensure that you always have the products that you need, your 3PL warehouses need to consistently keep up with their inventories. This is where 3PL technology can really come into its own. You can utilize the data that is collected from your 3PLs inventory management systems to determine which products you should quickly fill up and which you should consider slowing down the process. For example, if you know that there are certain products on your delivery list that have a low profit margin, but you know that there are several other products that are more profitable, then you can choose to fill the product orders that are not as urgent with the less profit margin product and allow the higher profit margin product to slowly sell out while your less profitable products continue to sit on the shelves.

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