[FR] 3PL logistics: should you outsource your supply chain management?

The world of logistics and the supply chain is full of all kinds of acronyms. Among them, you’ve probably heard this one more than once: 3PL.

And with good reason: 3PL logistics can be of interest to more than one company looking to structure its supply chain and organise its activities in a rational way.

Focus here on the concept of 3PL logistics, its advantages and its points of attention, to find out if you need such a service provider.

What are 3PLs in logistics?

3PL logistics refers to the process of subcontracting some or all of your logistics processes to a service provider outside your company.

This outsourced logistics provider can take care of storing your products, preparing your orders and transporting your goods. Its services also include declarations and customs clearance for international shipments.

A 3PL service provider can also offer you other value-added logistics services, such as product customisation, labelling, or the management of returned goods (reverse logistics).

1PL, 2PL, 3PL, 4PL, 5PL: what are the differences?

The terms 1PL, 2PL, 3PL, 4PL and 5PL refer to different levels of service defined to classify possible logistics service providers.

These are known as :

• 1PL (First Party Logistics): suppliers who handle the direct transport of goods from the manufacturer to the point of sale.
• 2PL (Second Party Logistics): transport solutions by rail, road, sea or air that you can outsource.
• 3PL (Third Party Logistics): as we have seen, this type of company takes charge of your entire supply chain, in your own warehouse. It can offer you handling, warehousing, packaging, delivery and transport services.
• 4PL (Fourth Party Logistics): consulting companies offering audits and advisory services to optimise your supply chain management. This type of service provider can supervise your logistics software, your inventory and the traceability of orders, as well as managing all your external operators and service providers.
• 5PL (Fifth Party Logistics): service providers who take charge of your company’s entire supply chain and logistics strategy, making maximum use of process automation.

All of these names allow you to set up a more or less outsourced logistics organisation.

What are the advantages of 3PL logistics?

Whether you operate in e-commerce or retail, 3PL logistics can offer significant advantages for your business strategy.

Increase the performance of your supply chain

3PL logistics experts are experienced service providers in stock management, order preparation and product transport processes.

If you don’t have in-house logistics expertise, or if you don’t yet have warehouses, it may be worth entrusting them with some or all of your logistics operations.

Ensuring a good level of service for your customers

Thanks to the well-established logistics processes and workflows of the outsourced service providers you choose, your customers will be delivered on time, and your products will be transported in good condition. So you can be sure of optimum customer satisfaction.

Tailor-made solutions for your logistics needs

You can select from the wide range of logistics services offered by your 3PL provider the ones that suit you best.

For example, if you only need order pickers, but take charge of your transport, this is perfectly possible with certain 3PL logistics solutions. Another possibility is to use this type of service provider when you have peaks in logistics activity (and therefore need more manpower).

Reduced costs

3PL logistics solutions often benefit from competitive rates linked to their volume of activity, which they pass on to their customers. Thanks to them, you can benefit from reduced logistics costs, particularly in terms of storage and routing.

Focus on your core business

Whether you’re an e-tailer or a logistics manager in the retail sector, 3PL logistics means you can focus on marketing, sales and making your company more competitive in your market.

What are the points to bear in mind when outsourcing?

Logistics outsourcing has its advantages, but there are a few points to bear in mind.

Don’t forget that using an outsourced logistics provider can :

• Lead to a loss of direct control over your logistics, and can create a dependency on your service provider.
• Require changes to your company’sprocesses, in order to coordinate as closely as possible with the chosen service provider.
• Include security risks, as you will inevitably be exchanging data with your service provider. Check that the tools and software used in common with them meet the highest security standards.

In any case, outsourcing some or all of your logistics requires good communication with your service provider, to coordinate your efforts and ensure that both sides are responsive in the event of a problem.

When do you need 3PL logistics services?

After discovering the 3PL concept, are you still wondering whether you might need this type of logistics solution?

This could be the case if :

• You’re just starting out in your business, and haven’t yet structured your logistics processes.
• You don’t have the internal resources to ensure that your logistics activities run smoothly, and your customers’ satisfaction is at stake.
• You have a peak in orders to manage: you can then mandate a 3PL service provider for the duration of your peak season to assist you and maintain a good rate of dispatch.
• You want to reduce the cost of your logistics budget.

From now on, it’s up to you to decide whether you want to keep control of your logistics activities, or whether you want to outsource some or all of them to a quality 3PL provider.