Your business — in some ways, it’s very similar to many other companies in the same space, yet in others, it is intensely unique. Your product offerings and corporate culture definitely make yours one-of-a-kind, but like the other companies, you’re finding that you’re putting more and more time and resources into keeping your supply lines flowing without a hitch. Everybody wants to get their products into the hands of their customers in a timely manner, at a good price and in a seamless way. But how do you accomplish all of that? The answer, in almost every case? 3PL.
What is 3PL?
What exactly is 3PL? 3PL is an acronym for Third-Party Logistics. Most companies that provide 3PL offer a wide range of operational logistical services. These services include warehousing, order fulfillment, shipping, inventory tracking, and handling the associated customer service aspect (including returns).
The reasons for outsourcing your order fulfillment and shipping to an outside vendor are numerous. The biggest ones are costs (buying or leasing warehouse space as a fulfillment center along with a warehouse management system, which consists of both hardware and software) and headcount (which includes the foresight to scale up and down during both busy stretches and slower times). The former is a headache for the accountants and number crunchers; the later, a thorn in the side of the human resource department.
That means there are a myriad reasons why you should outsource your order fulfillment to a firm that is in that business full-time. But you need to know your needs for this to work. Pinpointing your requirements is an important step in determining your relationship with an order fulfillment company. With plenty of 3PL providers to choose from, something important to ask yourself is, “Is this company able to provide the exact services I need?”
3PL firms offer a number of services, yet not every company offering 3PL may be able to cover all the bases. Different businesses need different types of fulfillment services, and yours in no exception. Take a look around and see where things go. Are you shipping direct to your customer (D2C)? To retail establishments, perhaps? Or shipping in bulk to wholesalers? All of these methods require particular types of order fulfillment, so you’ll want to find a 3PL partner that is skilled in handling your particular needs.
Do you have periods of ups and downs in your annual sales cycle? For example, if you sell items that are in the gift category, you will have spikes before holidays throughout the year (Valentine’s Day, Mother’s Day, Father’s Day, graduations, etc.) and definitely before the holidays at the end of the year. That would require scaling up things in the period leading up to these dates and, of course, scaling things down in the off-season. Depending on who you ship to, these timelines can vary greatly. Shipping D2C would mean higher volumes closer to the peak season than shipping to retail, while shipping to wholesalers would mean a busier time even farther out from a holiday.
The Bottom Line
It all comes down to to partnering with a 3PL vendor that “gets” your business — knows how to handle day-to-day of order fulfillment; deal effectively with warehousing, inventory, shipping, returns and customer service related to shipping; and effectively deal with the type of customer (consumer, retail or wholesale) at the receiving end of your products.
Chris Capelle is a technology expert, writer and instructor. He has worked in the publishing, advertising and consumer products industries for more than 25 years.
References
- https://www.investopedia.com/ask/answers/052115/what-difference-between-direct-and-indirect-distribution-channel.asp
- https://www.bigcommerce.com/blog/3pl-logistics-tips/#:~:text=A{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}203PL{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20should{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20be{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20both,present{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20and{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20future{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20fulfillment{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20needs.
- https://www.supplychaindive.com/news/4-trends-order-fulfillment-spotlight/539472/