Overview of Third-Party Logistics
Third-party logistics (abbreviated as 3PL, or TPL) is an organization's use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services. A third-party logistics provider (3PL) is an asset-based or non-asset based company that manages one or more logistics processes or operations (typically, transportation or warehousing) for another company.
Meaning of Third Party Logistics Provider
Third-party logistics (abbreviated as 3PL, or TPL) is an organization's use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services. A third-party logistics provider (3PL) is an asset-based or non-asset based company that manages one or more logistics processes or operations (typically, transportation or warehousing) for another company.
Third-party logistics providers typically specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers' needs, based on market conditions, to meet the demands and delivery service requirements for their products. A provider of such integrated services is referenced as a third-party supply chain management provider (abbreviated as 3PSCM), or as a supply chain management service provider (abbreviated as SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.
Services Outsourced
Given below are the activities and services that are typically managed by third party logistics providers:
- Domestic transportation
- Warehousing
- International transportation
- Customs brokerage
- Freight forwarding
- Freight bill auditing and payment
- Cross-docking
- Reverse logistics
Lead Logistics Provider
A lead logistics provider (abbreviated as LLP) manages all logistics activities for a company, including management of 3PLs. It is sometimes referred to as a fourth-party logistics provider (abbreviated as 4PL) because an LLP functions as a third party overseer of other third parties.
Benefits of Outsourcing
Outsourcing a supply chain process can help a company achieve several benefits, particularly by enabling it to focus on its core business. Given below are some of the benefits:
- Cost savings and reduced cycle times.
- Better tracking of key operational functions.
- Decrease supplier costs through leverage of volume discounts
- Improved adherence to policies.
- Improved inventory performance
- Ability to use leading-edge technology and industry best practices
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Miscellaneous Warehouse Processes
At the end of each inventory control, the Contractor provides the Ordering Person with an inventory report which contains a list of all stock adjustments. The Ordering Person uses the report to create, by use of his/her own means, necessary value and accounting adjustments related to the stock. Let us look at some to the mislaneous warehouse processes not covered earlier.
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The Outbound process starts with routing the shipments. The Outbound execution process starts from the point when pick tasks are completed for an outbound shipment and ends at the point where the outbound packages are loaded into trailers. The Warehouse Outbound process includes managing and controlling outgoing materials starting from the download of orders through to the shipping of products from the warehouse.
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