A 3PL, or third-party logistics provider, is a partner that helps companies optimise their supply chain and logistics operations. They specialise in services such as inventory management, warehouse storage, order fulfilment, returns processing, and transportation.
You may also hear 3PL companies called by other names:
Fulfilment company
Order fulfilment companies
Fulfilment warehouse
Fulfilment centre
Not all 3PLs offer the same services, but their main goals are to serve your fulfilment and warehousing needs so you can streamline your supply chain management.
What does a 3PLs do?
A few key roles of 3PLs are to store and manage inventory and fulfil orders. This lets you leverage the cost-efficiencies of a centralised inventory and strategic distribution model.
3PLs also provide transportation services, managing the movement of inventory between various points in the supply chain. This includes coordinating shipments from vendors and customers, optimising delivery routes, and providing real-time updates.
Some 3PLs can also help you with global supply chain matters, such as import, export, and customs procedures.
Why do you need a 3PL?
A 3PL for eCommerce companies can reduce the operational burdens of running supply chains. By letting a 3PL handle inventory and logistics, you can focus your resources on growth activities, like identifying new customer bases or developing new product lines.
Some eCommerce companies may also work with 4PLs or fourth-party logistics providers. These providers act as consultants and managers, helping to design, run, and optimise your supply chain and logistics. They may help you source and manage 3PLs, too.
The 3PL order fulfilment process
If you’re in the UK and are considering working with a 3PL company or are new to outsourcing shipping, what goes on in a 3PL fulfilment centre may seem like a black box.
But the 3PL fulfilment process doesn’t have to be a mystery, nor should it be!
So what exactly happens at a 3PL’s eCommerce warehouse once a customer clicks “Submit order” on your online store? Let’s explore the entire process from start to finish.
Receiving
A 3PL can’t ship orders without inventory on hand. The “receiving” of inventory in a 3PL warehouse refers to the acceptance of incoming inventory followed by its storage.
Each 3PL has its own processes and capacity for receiving and storing inventory.
For example, 3PLs require clients to fill out a Warehouse Receiving Order (WRO) so that we know which products we will be receiving and how many units. This helps us stay organised and timely with receiving, meaning we can start fulfilling your orders more quickly and efficiently.
3PL Warehousing
Once we receive your inventory, we store your items in our fulfilment centres. Each SKU has a separate dedicated storage location, either on a shelf, in a bin, or on a pallet.
Different 3PLs have different storage capacities; not all 3PL warehouse space is created equal. It’s important to work with a 3PL that has more than enough storage space for your current inventory — as your product line and order volume grow, your 3PL storage must be able to scale with you.
Note: A 3PL is different from an on-demand warehousing company that just matches you with excess space in miscellaneous warehouses without operating any logistics centres themselves.
Picking
When a customer places an order, it’s time for the 3PL fulfilment process to begin. (You may have heard the phrase “pick-and-pack fulfilment” before — this is the first half of that.)
Some 3PLs require you to manually upload orders to their system. Sometimes, this involves spreadsheets including order details, customers’ shipping details, and more. This can be an inefficient and complex way to manage orders.
Other 3PLs have sophisticated technology that integrates directly with your eCommerce platform or marketplace. These 3PL fulfilment software integrations bring orders, shipments, inventory tracking and stock levels, and more together in one place to streamline the fulfilment process for more automated shipping.
This includes automatically pushing customers’ online orders to your 3PL as soon as they’re placed.
When an order is sent to your 3PL, it is assigned to the warehouse picking team. The picker receives a picking list of the items, quantities, and storage locations at the facility to collect the ordered products from their respective locations.
Packing
When all items in an order have been picked, it’s time to get them securely packed for shipping. The packing materials used will depend on your 3PL’s capabilities, your brand preferences, and the items being shipped.
The most common standard packing materials include:
Unbranded boxes
Bubble mailers
Poly bags
Packing tape
Dunnage
Paper-based dunnage
Some 3PLs will charge for packing materials as a separate line item, while others include them as part of their fulfilment services.
As experienced shippers, the 3PL will choose the best packing materials to both protect your products and achieve the lowest practical parcel weight and size. They will also optimise packages so that you don’t have to split shipments.
Couriers charge different rates based not only on your parcel size but also weight. With the exact specifications dependent upon both the carrier and the parcel destination. Using the right packing materials can help keep logistics costs low.
If you want your brand to shine through your shipping, make sure you partner with a 3PL that allows you to use custom packaging, such as custom boxes and inserts. Oftentimes, receiving a package is the first in-person experience a customer has with your brand, so branded packaging can make a big impression.
Shipping
The next step is shipping your order. Most 3PLs inside or outside of the UK will purchase and print shipping labels on your behalf. Some 3PLs have preferred carrier partners, while others compare shipping costs from a variety of couriers. The latter not only helps 3PLs offer clients the most affordable pricing but the most flexible delivery options and customer choice. In addition, working with multiple couriers is a great way to mitigate against delivery service disruptions, whether driven from inclement weather, carrier labour strikes or as networks become busy at peak times.
Couriers such as DHL, DPD, Royal Mail, and Evri pick up orders from 3PL warehouses to ship. The carrier and shipping speed for each order depend on the 3PL’s partnerships and policies as well as the ship options offered by the client and selected by the end customer.
Once the order ships, 3PLs with the integrated technology mentioned above will automatically push tracking details to merchants’ online stores.
Returns
Many 3PLs also offer return processing services. If a customer returns an order by shipping it back to your 3PL, your 3PL will process the return and restock or dispose of the item depending on their policies and your preferences.
You can choose to have your 3PL provide return shipping labels for your customers. This offers convenience for both you and your customers; you won’t have to handle returns in-house, and customers can easily track the status of their return order.
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