How Third-Party Logistics (3PLs) Handle Order Fulfillment: The Complete Guide

Order fulfillment is one of the most important things a small business does. The process begins when a customer places an order and ends when the product is delivered to the customer’s door.

What may at first appear to be a straightforward procedure can become extremely complicated when you factor in the location of your company’s inventory, the location of the customer, the quantity of the purchase, and the delivery schedule. When you think about the chance of making money, it gets even more complicated.

Third-party logistics providers (3PLs) have been and will remain to be the industry’s best-kept secret, enabling several e-commerce giants to ride through the current supply chain crises. Now, analysts say that major disturbances to the supply chain occur every 3.7 years and that these disruptions are getting worse and more frequent with time.

If you’re struggling to fulfill orders internally, it may be time to look into outsourcing to a 3PL provider. Here, you can find all the information you require concerning third-party logistics providers (3PLs).

What Does a Third-Party Logistics Service provider Do?

3PL companies help online businesses with different kinds of eCommerce logistics. Some of the services they provide are managing inventory, warehousing, and filling orders. A lot of businesses now hire 3PL providers as the market for the same was worth more than $1 trillion in 2022, and it is expected to grow at a CAGR of more than 5% between 2023 and 2032. The growth of the international e-commerce sector can be directly attributed to shifting customer shopping habits.

In simple words, a 3PL, aka third-party logistics provider, is a company that helps companies with their shipping procedures by offering logistics services. 3PLs are known for their expertise in the logistics industry, and they can help companies better fill orders to keep customers happy.

Most of the time, a 3PL becomes part of the company’s ways of storing and moving inventory. Companies hire a 3PL to store, package, and ship orders instead of doing all of those things themselves. The 3PL owns or rents the storage and transportation assets it needs to fill orders from a client from a faraway place. By letting a third-party provider handle the logistics of 3PL fulfillment, companies can spend more time growing and improving their business.

The earliest versions of the third-party supply chain developed in the 1970s when intermodal marketers began transporting companies’ shipments to rail terminals. 3PL software was made to help businesses keep track of their deliveries as well as inventory as the field grows. Third-party logistics is used by all types of businesses today, from the Fortune 500 to small businesses.

How 3LP Can Help With Supply Chain Management

Using a third-party logistics company can help your business in many ways. Third-party logistics can help your business in the following ways:

Lessen the costs of logistics

Often, third-party logistics companies have connections in the industry, which means they have better access to vendors and can get you better deals. By working with them, you can use their connections and power to cut costs on shipping, supplies, and storage, which will save you money in the end.

Get experience with logistics

Providers of logistics services by third parties often have decades of experience between them. When you hire a 3PL company, you can use their knowledge to help you deal with logistics problems.

Pay attention to key functions

It takes a lot of time and money to run a logistics division in-house. When you outsource your logistics to a 3PL, you free up your company’s time, energy, and resources to concentrate on what it does best.

Grow your business

3PLs offer services that are made to fit the needs of your business. If your business grows and you sell more products, you can sign a bigger contract with them that includes more services. On the other hand, if you want to scale back your business, you can choose not to use some of their services.

A 3PL can change and expand its services based on what the client needs, and the client still has some control over how shipping operations are run. You can decide ahead of time what functions you want the 3PL to handle and what you will handle internally, allowing for a more informed negotiation. 

Once you’ve narrowed your choices down to a few 3PLs, it’s time to dig deeper to find the best fit for your business. Before you talk to a 3PL in-depth, make sure they have a non-disclosure agreement and sign it. This will protect your business. 

With time, you’ll get to know and discover if any of the 3PLs on your list are a good fit for your business or not. It may be challenging or quick to find the right third-party logistics partner who will keep your company’s best interests in mind, but it is important that you do it right.