Third Party Logistics (3PL) is the function by which the owner of goods (The Client Company) outsources various elements of the supply chain to one 3 PL company that can perform the management function of the clients inbound freight, customs, warehousing, order fulfilment, distribution, and outbound freight to the clients customers.
- To provide supplementary supply chain support to test the waters in new regional markets or countries where your company doesn’t currently have a presence without taking the full plunge and opening a new distribution center.
- If you are a company whose business is seasonal in nature using a 3pl provider allows you to scale your warehousing space, labour, and transportation to provide full support during the peak months of your business while cutting back during slower months.
- To increase on-time performance and realize efficiencies with the management of your inventory by using a 3PL provider that has superior technology and processes than your in-house operations.
- To take advantage of lower transportation rates provided by logistics firms that have significant buying power due to the volume of freight they deal with and their ability to leverage load consolidation and backhaul opportunities.
- To quickly build a multi-location distribution network with lower risk, without the significant capital investment associated with building out a network on your own.