Overview of Third-Party Logistics

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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Creation Date Monday, 02 January 2023 Hits 3889

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