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Third Party Logistics: What does it mean?

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Every industry has its own set of unique words, phrases, and abbreviations that are easily understood by industry insiders, which may seem quite foreign to people not working within that specific field. Those who are unfamiliar with the logistics and supply chain management industry may not have known that “3PL” stands for third-party logistics.

What is 3rd party logistics?

Third-party logistics refers to a company’s use of third-party entities to manage elements of their distribution, warehousing, and fulfillment needs. Although a third-party logistics provider does not hold ownership over the inventory they are managing, they are responsible for performing the requested fulfillment activities outlined by their clients. 3PLs are generally not freight forwarders or carriers, but they can be.

3PLs are incredibly important to the success of many large companies, and according to a report from Armstrong & Associates, 86% of Domestic Fortune 500 companies use 3PLs for logistics and supply chain functions. The report also stated that General Motors, Procter & Gamble, and Wal-Mart each use 50 or more 3PLs, and that the Global Fortune 500 3PL market is at $250.2 billion.

When to Work with a 3PL

Some companies may think they can save money by handling their own supply chain needs, but at a certain point that will no longer be possible. Certain 3PL providers will focus on one part of the logistics and supply chain process. However other 3PL companies, like TOC Logistics, will handle all aspects of the supply chain for their customers, making it a seamless process.

When companies experience growth, especially at a quick rate, that means they will also be met with challenges in managing their supply chains. This is when a 3PL provider will become extremely helpful. 3PLs are able to offer custom solutions that will meet a company’s specific needs. Leveraging a 3PL provider has a lot of advantages, including saving time and money, increasing opportunities for continued market expansion, ongoing optimization, and flexibility.

How a 3PL Can Help You

As a third-party logistics provider, we handle everything from supply chain analysis, carrier procurement and contracting, routing guide development and optimization, to tactical shipment execution and on-site or remote management. In addition to supply chain management, our team also offers global freight forwarding and consolidations, warehousing, and distribution services.

 

If you’re interested in learning more about how a 3PL company could help you, please reach out to a member of our team today. Our experienced team has the industry relationships and knowledge needed to create positive results and impact your bottom line.

31 Jan, 19

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