What is 3PL?
3PL is the acronym for third-party logistics. It’s a service, where instead of your business having to manage the complexities of delivering products to your customers, you can outsource it to third-party, like us!
Why Choosing a 3PL Provider with Smart Tech is a Game-changer
by Nathan Rothfield
What is a 3PL provider?
A good 3PL provider offers the service of supply chain management and third-party logistics. This can include a wide range of services and often covers:
— Transportation
— Warehousing
— Picking and packing
— Order fulfilment
— Freight management
What are the advantages of using a 3PL provider over self-fulfilment?
While some businesses try to do it all in terms of supply chain management, there are a number of advantages of using a 3PL warehouse operator instead of trying to operate with your own warehouse.
COST AND TIME
3PL warehouse providers are specialists. They have everything they need to provide third-party logistics operations and fulfilment services, including warehouses, storage and retrieval infrastructure and software, skilled staff and transportation specialists. It’s unlikely that you can match their expertise and economies of scale, meaning it will cost you more and take longer to do it yourself.
LOW CAPEX
For you to acquire and maintain a complex warehouse and distribution network would consume a large amount of capital. You can keep your Capex low and put it to better use inside your area of expertise while outsourcing fulfilment solutions to a third-party logistics provider.
FLEXIBILITY
It’s unlikely that you could cover all of this wide brown land with your own fulfilment services. It’s simply too vast to be efficient, and third-party logistics providers can do it with great flexibility, allowing you to turn transportation services and warehouse fixed costs into variable costs and scale your workforce to suit demand.
FOCUS
Are you a fulfilment services expert? If not, your best bet is to focus on your core business and do that well. Allowing a 3PL warehouse specialist to handle your logistics is smart business because their third-party logistics focus will not only provide cost savings and time savings but it will make you look good to your customers.
How does the 3PL fulfilment process work?
There are variations on the 3PL fulfilment process, but most of them follow this general pattern:
— Send inventory to your chosen 3PL warehouse provider
— Orders on your eCommerce site/s are synced automatically
— Warehouse staff pick and pack the ordered items
— The 3PL arranges shipping via a carrier partner or its own fleet
— The package is collected from the 3PL warehouse and delivered
— Tracking information is synced with your order management software
— Your customer is happy and you have data on the whole process
Why are third-party logistics providers so helpful for eCommerce businesses?
Smart 3PL warehouse technology enhances the retail customer experience.
Bricks and mortar retail is being challenged by a wave of nimbler eCommerce competitors: think Amazon. If you’ve built a terrific website and online store, your customers’ experience (CX) is already streets ahead of most.
Now add in the expertise of a great 3PL provider and you will improve customer satisfaction even further, thanks to features like:
— Same day delivery
— Seamless integration with your eCommerce store
— Inventory intelligence to optimise warehouse storage
— Fully customised fulfilment; branded packaging, marketing inserts, sustainable paper, reduced plastic packaging and more
— Customer-centric order tracking capabilities.
With communication flowing both ways, back to you and outwards to your customers, everyone is in the loop. Customers gain confidence in your delivery and their user experience (UX) is enhanced because you have optimised their satisfaction with third-party logistics service.
Spend less time stressing about supply chain management and more time on innovating your products
Let’s say you got into eCommerce because you loved the online experience and thought it was better for customers.
Wouldn’t it make sense to continue innovating and improving your CX and UX rather than attempt to become adept at third-party logistics services; something you possibly are not so passionate about?
There are 3PL providers in Australia delivering 45k orders per day. Imagine your business coping with that magnitude of work. Now imagine you don’t have to and think of the savings in staff time and admin alone.
The advantage of choosing a third-party logistics provider means letting their cloud-based systems and rapid digital communication software deliver great CX for your customers while you save time and money to focus on the aspect of business that you do best.
Third-party logistics providers can help you scale up effortlessly
An excellent advantage 3PL provides for eCom businesses is the ability to scale to suit a range of scenarios.
SEASONAL SALES
If your sales are lumpy or seasonal, you can avoid investing in warehouse space that sits idle for part of the year. Let a third-party provider worry about that and optimise your warehouse space at the peak times.
RAPID GROWTH
If your business is growing rapidly, a 3PL allows you to expand your market reach easily, without drawing on your cash reserves to expand distribution centres.
IN FLUX
Maybe your staff or business is expanding or shrinking dynamically in response to a sudden event, like a pandemic. A third-party logistics services provider has the expertise and systems in place to scale up and down as your business changes with the economic landscape, without complicating your situation.
What integrated technology and features should you look for in a 3PL provider?
INVENTORY MANAGEMENT SOFTWARE
A good 3PL should have software systems in place to be able to give you data on your inventory in real-time. You need to know what’s in the warehouse, on the road, being delivered, delivered and returned.
FLEXIBLE APIS THAT INTEGRATE AND CONNECT WITH ANY OF YOUR SYSTEMS
Your 3PL should be in the business of making your work easier. This starts with automating manual procedures as much as possible through the clever integration of APIs. When the machines are communicating clearly, your staff are being freed for more valuable tasks.
SUPPLY-CHAIN FINANCING EXPERTISE
If you think creatively about a third-party logistics provider, it doesn’t have to just apply to your sales and fulfilment functions. It can also equally benefit your supply chain.
Rothfield has a smart tech supply-chain financing capability that is a real game-changer for eCommerce business, managing suppliers on your behalf, delivering stock and consolidating your invoicing.
CLOUD-BASED TECHNOLOGY
A cloud solution is a smart tech strategy for eCommerce business. You gain enterprise-level security, processing speed and reliability.
In the cloud, your scope becomes global and you can raise your sights to include international markets without missing a beat.
KITTING AND PACKAGING SERVICE OPTIONS
Not every eCom business ships standard widgets in standard boxes. You may really appreciate a 3PL that can cope with unique arrangements and packaging, known as kitting and packaging in the trade.
CONNECTIONS WITH DIRECT MAIL SERVICES
When you harness the smart tech strategy of 3PL with Direct Mail, you optimise CX, brand impact, engagement and sales. It makes sense to integrate printed marketing material with product delivery, with significant cost savings an added incentive.
AN ORDER FULFILMENT AND RETURNS SYSTEM
You’ll need every step of the order fulfilment process covered, from inventory management to ordering, picking and packing, transport and tracking, delivering and also a returns system.
To err is human, so plan for products to return from customers in a way that retains their loyalty and provides the feedback you need to improve your systems.
DISTRIBUTION ANDLOGISTICS CONNECTIONS
Your 3PL provider needs a 3PL warehouse as well as a distribution network and logistics connections. Depending on numerous factors, your 3PL might have its own fleet, or rely on trusted shipping carriers to fulfil customer orders.
The ownership is not the important issue, but it is how the 3PL manages its distribution that is vital to your success.
Ask to speak to some of their clients about their 3PL experience before you sign on the dotted line.
Get in touch
The team of experts at Rothfield knows your business is unique. Ours is too. We specialise in helping businesses build bespoke third-party logistics services that are tailored to their needs and business growth.
