A project on third part logistics

1. THIRD PARTY LOGISTICS
P SHYAM
RA1852001020035
MBA 2ndYEAR

2. What is a 3PL?
You take the orders. Your third-party logistics provider (3PL) fulfills them. It’s that simple and if
it’s seamless, customers never think twice about the handoff between received orders and its
fulfillment. A 3PL is a link in the supply chain brands use to outsource part or all of a business’
distribution and fulfillment services.
The market for 3PLs providers exploded following the birth and exponential growth of
ecommerce. Most Fortune 500 (86%) companies and 96% of the Fortune 100 use services like
these.
3PLs receive new inventory from your manufacturers before shipping it to consumers. They can
also handle retail distribution and returns. Ultimately, they deliver your orders with an out-of-box
experience.
When Should You Enlist a 3PL?
Don’t wait until you’re overwhelmed by order growth. Breaking the fulfillment promises you
make to customers can damage your brand. It also prevents you from being wholly focused on
growing your business.

3. Three key questions will help you determine whether you need a 3PL:
Are you fulfilling more than 10-20 orders per day?
If so, calculate the costs of partnering with a 3PL to keep your profit margins strong. Likewise,
estimate the growth potential—opportunities you’re not currently able to pursue–by outsourcing
fulfillment.
Are you running out of costly inventory storage space?
Brands often forget to include storage costs in their fulfillment expense calculations. Compare
your current expenses with estimates from 3PLs. Determine if bundling storage costs with
outsourced fulfillment is a better value.
Is your business a coiled spring?
If you’re expecting a sustained spike in order volume—not just one-off flash sales or marketing
promotions—estimate the costs and headcount necessary to meet demand yourself. Compare with
the costs of outsourcing fulfillment.

4. Types of Third-Party Logistics Providers
Investigate four crucial capabilities when comparing 3PLs:
Warehousing
Transportation
Distribution
Shipping and receiving
Size and specialization matter. Some 3PLs lack the native full-service capability and specialize in
one or two areas. Larger established firms offer end-to-end execution and integrate seamlessly.
1. Warehouse- and distribution-based 3PLs
This is the most common type of 3PL—they store, ship, and handle returns. Innovative
warehouses can help you offer Amazon Prime-like shipping in two days. If you’re expanding
globally, international warehouses can help build a global supply chain.
When considering a warehouse solution, evaluate the following criteria:
Warehouse network:
You’ll require a larger network of warehouses if you promise customers expedited delivery.
Shipping speed hinges on warehouses being geographically close to your customers. You’ll also
need to accurately forecast inventory levels to appropriately stock warehouses in your network.

5. Pricing:
Demand a transparent pricing model—and understand how that model changes as you grow.
Identify what’s included and what costs extra—ask about returns management or fees with each
service. Or how extra services like “kitting” (bundling several products in special packaging)
impact pricing.
Shipping carrier rates:
You might have better shipping rates than the warehouse you’re evaluating. If so, ensure your
warehouse partner will accept them. Conversely, larger warehouse networks can often use their
heft to negotiate deeper discounts than lone businesses.
Insurance:
Determine whether you want packages fully insured while in storage and during delivery and
return. Be precise when negotiating. For instance, you may only want to insure items up to $100 or
beyond. Understand if what you’re getting is insurance or simply a carrier-included liability.
Daily cutoff time for fulfilling orders:
Identify the time at which your warehouse stops fulfilling the day’s orders. If orders are placed
after the warehouse cut off time, they won’t go out until the next day. This impacts how you
market fulfillment and the delivery dates consumers expect.

6. Delivery service levels:
Sweat the contract details before you commit. Decide whether you prefer a refund or credit if
shipments aren’t fulfilled on time. Be sure you know whether you’ll be credited for broken or lost
items—understand the service-level guarantees offered to gauge your liabilities.
Management tools:
Ensure 3PLs integrate with your existing inventory management system (IMS), order management
system (OMS), order processing software, and/or warehouse management solution (WMS).
Synchronizing systems ensures orders are automatically picked, packed, and shipped while
simultaneously updating inventory levels.
2. Transportation-based 3PLs
Specialize in the transportation between locations. For example, they might transport inventory
between your factory and warehouse or you and your retail buyer. Consider the following when
weighing a parcel transportation provider:
1. Origin location
2. Destination location
3. Timeframes
4. Shipping methods
5. Service levels
6. Pricing and discounts

7. Remember to consider import/export taxes and duties if you transport freight globally.
Traditional parcel transportation providers include DHL, FedEx, UPS, and the USPS. Same-day
delivery is normally handled by local couriers like Postmates and UberRush. Transportation
marketplaces like Flexport, Freightos, and GrandJunction connect buyers and sellers.
3. Financial- and information-based 3PLs
After you’ve scaled revenue to eight or nine figures, you might want to consider a financial or
information based third-party logistics company. These firms provide industry-specific insight and
can optimize complex global supply chains. They also provide internal controls related to freight
auditing, cost accounting, and inventory management. Leading consultancies include Chicago
Consulting and St Onge. Apps like ShipperHQ can also add valuable insights.
Advantages of 3PLs
3PLs will automate fulfillment for you, so you can focus on the rest. Spend time growing your
business, not on moving packages.
1. Work with the pros
Shipment and fulfillment optimization are standard 3PL specialties. You can build your own team
but because you’re not focused full-time on fulfillment, you’ll likely achieve substandard results
versus 3PLs.

8. 2. Manage internationalization
Expanding internationally requires a global fulfillment network. Processing international orders
requires documentation and accounting for customs and duties. Outsourcing these responsibilities
can make cross-border selling easier. It can also expedite delivery times, improve customer
satisfaction, and reduce shipping costs.
3. Limit Overhead
Leasing warehouse space and hiring a fulfillment team increases your overhead. Maintaining
fulfillment assets is costly. Working with a 3PL can minimize costs so capital can be directed
toward return generating endeavors.
Disadvantages of 3PLs
The biggest risks are losing control over your inventory and trusting a third-party with your bran
1. Hidden responsibility
Your 3PL won’t interact directly with your customers. When products are late, who will your
customers turn to? You. (Regardless of whether it’s your fault.)

9. 2. Steep set-up fees
Significant upfront costs include integrating a 3PL’s software with your ecommerce store, SKU upload, and
account access.
3. Out of your hands
Inventory stored in 3PL warehouses won’t be immediately accessible should you encounter quality
control issues.
The benefits of 3PL
The primary benefit of using a 3PL service to handle logistics, such as packaging, warehousing,
fulfillment and distribution, is cost savings -- for example, not having to maintain a warehouse or the
staff to monitor supply chain operations.
A 3PL service likely offers better performance on efforts such as shipping while also enjoying an
easier ability to scale its operations. If the publishing company in the example above suddenly needs
to ship more copies of a popular title, a fulfillment center will have an easier time meeting that
demand than if the publisher itself had to ship additional copies of the book.

11. THANK YOU