Third Party Logistics Guide 2021 – All You Need to Know

Your customers are happy when they receive their favorite products quickly. Getting those to your clients in an efficient and cost effective way is vital for any business operation. However, as your business grows, it gets more difficult to manage the supply chain. As result, many issues arise. To reduce them, companies opt to outsource their logistics operations, to a third party logistics company, or 3PL. Our pros at moving companies Jeddah have prepared this guide for you. Read on to learn all you need to know about third party logistics in 2021.

What is Third Party Logistics, or 3PL?

Third party logistics is an outsourced provider that manages all or part of a company’s logistics requirements. These include customs clearance and freight forwarding among other tasks. In other words, a 3PL provider collects the orders from your manufacturer and delivers them to your customer’s doors. Depends on the size of your business, or how many orders you get per day, you can choose a 3PL provider that will take care of it all, or just a portion of it. A 3PL  is legally bound and responsible to fulfill your orders, but it doesn’t claim ownership of your inventory while it’s in your provider’s possession. This is why third party logistics is attractive for businesses, especially nowadays, when COVID-19 causes disruptions in the supply chain, and eCommerce is on a meteoric rise.

Delivery
3PL makes the delivery of orders to your customer’s door quick and efficient

Do You Need a 3PL provider?

Once your business starts to grow, you need the network, expertise, and resources to carry out a seamless logistics process. Apart from distribution, you need to consider your storage solutions as well. To know when is the right time to turn to a third party logistics provider is a key to success. If you are late with the decision, you are risking finding yourself overwhelmed with unhappy customers and delayed orders. Here is what to consider:

  • The number of orders you’re fulfilling – when it gets between 10 and 20 per day, this is the right time to start looking for your third party logistics provider.
  • Inventory storage – when the volume of your fulfillments increases, in terms of storage it’s always more cost-effective to work with a 3PL.
  • Spikes in sales – holiday seasons are usually when steep spikes in sales occur. In this case, you might be short on resources to deliver purchases to your customers on time. So, hiring a third party logistics provider at least 3 months in advance is the optimal solution for this scenario.
Werehouse
Storage solutions are an important element of third party logistics

How to Choose the Best 3PL provider?

When you contemplate on a good third party logistics provider, besides cargo transportation services you need to look into other aspects too. Here is a brief account of those:

  • Proven performance – consider how long the company has been in service, who are their clients, etc.
  • Flexibility – do they offer various shipping methods to adjust to your delivery requirements? What kind of services they offer and are they willing to meet your individual needs?
  • Network – your third party logistics partner should have a wide network, and good connections, so to efficiently support your business.

Finally, there are many benefits to working with 3PL. You get access to supply chain expertise and save time and money. If you’re selling abroad, a 3PL takes care of the complex stuff, like duties, customs, and all documents. Third party logistics is vital for any business in 2021. So, make sure you hire the right partner and do so on time. Good luck!

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