What is 3rd Party Logistics (3pl Logistics)?
3PL is an abbreviation for Third Party Logistics. Third-party logistics is the transfer of part or all of a company’s material management or product distribution to another company. With another definition, third-party logistics is the outsourced logistics activities that are traditionally carried out in an organization. These third-party activities may cover all activities in the processes, as well as often selected specific activities.
These kind of fulfillment companies can be intermediary companies as well as providing the service themselves. Third-party logistics is the transfer of part or all of a company’s material management or product distribution to another company. These intermediary firms may be firms that have their own investments, as well as firms that use more than one 2pl firm in their organization. For example, a manufacturer company may give the management of its own warehouse’s stock inventory and shipment planning according to the orders given to a 3pl company, 3pl company will manage the personnel, inventory, information systems infrastructure necessary to perform the given works.
Customers want more strategic, solution-oriented and global answers in line with their needs. Companies are trying to circumvent their dissatisfaction with the complexity and difficulty of the supply chain in the lightest way possible. As important as transportation and logistics were 50 years ago, it continues to increase its importance today and will continue to do so.
Why we need a 3rd party logistics company?
Companies or individuals engaged in marketing work want to delegate logistics activities to specialized companies as Ukkprefulfillment in order to focus more on sales and increase their turnover. In this case, 3rd party logistics was needed.
What is the meaning of parties?
- 1st party: manufacturer, manufacturer, shipper, wholesaler, etc., is the producer of the good or service.
- 2nd party: an entity that is a direct customer or supplier of the first party.
- 3rd party: what is third party logistics service? It is the company that enters the flow of goods and services between these two parties.
It is the transfer of this work to a third company by a company that currently carries out the logistics activities within the company itself. In this context, companies transfer international transportation, storage, stock, packaging, labeling, shipping, distribution, cargo works to companies that specialize in this field and have the necessary facilities, equipment and personnel. In particular, companies that do not have warehouses in their own structure have transferred these works to a logistics company, channeling more sales and contributing to their turnover. They can do a job that they do with 4-5 people in their own warehouses, with the logistics companies that do it professionally, with 1-2 people. These significantly reduce the cost of companies and are written as negative in expense items.
What are the advantages of the 3PL logistics?
It reduces the stocking cost of companies with multi-user storage services. It enables companies to turn to their own fields of activity by saving on costly investments such as transportation and storage.
Transportation costs are reduced with the logistics service provider’s high carrying capacity and forwarding ability. Stock levels can be minimized.
Manpower is saved.
Risks such as loss, accident and theft are transferred to the logistics company. World-class talent and new technology are available.