Understanding Third Party Logistics and Order Fulfillment

Understanding Third Party Logistics and Order Fulfillment

From inventory management to warehousing and order fulfillment centers, Third Party Logistics (3PL) is the focal point of the supply chain. For companies that rely on logistics businesses–receiving, storing and shipping of inventory are crucial components to their growth. As a business grows, business leaders may find that fulfilling customer orders in-house is no longer feasible after a point. That’s where 3PL comes to the rescue. A third party logistics company does great labor for you. It will pick, pack, store and ship your products. 3PL logistics is the most prominent link between your manufacturing operations and your customers. Your business ultimately grows and the customers are contended when your order fulfillment operations run smoothly. It’s clear that excellent fulfillment is the key to success for e-commerce companies and 3PL companies in India help you achieve the same.

What are Third-Party Logistics (3PLs)?

Third-party logistics refers to the outsourcing of various logistics processes such as warehousing, fulfillment, and inventory management to a third-party business. These service providers allow e-commerce merchants to accomplish more and automate retail order fulfillment by using the best equipment and infrastructure.

With the introduction and growth of e-commerce in the past two decades, the term 3PL has become inevitable and the service providers have also expanded their services. The integration of warehousing operations and transportation services is altogether referred to as third party logistics in supply chain management.

Important Steps in a 3PL order fulfillment process

If you are new to outsourcing shipping or other operations and planning to consider working with a 3PL, everything seems to be a black box. However, this is not the case. Here’s what’s included in the entire third party logistics process from start to finish:

  • Receiving of inventory: Without the availability of inventory in hand, a 3PL can not ship orders. The whole 3PL order fulfillment process begins with the receiving of inventory in the third party logistics provider’s warehouse. Each 3PL has its unique capacity and processes for receiving and storing inventory.
  • Warehousing in fulfillment centers: Once the inventory is received, it is stored in 3PL fulfillment centers. Each third party logistics service provider has a separate dedicated storage location, different storage capacities. Make sure your 3PL provider has large storage space for your inventory so when your order volume surge, they must be able to scale with you.

  • Picking: When a customer places an order, this is the time when the 3PL process starts. Some 3PLs require businesses to manually upload orders to their system that involves spreadsheets including order details, shipping details and more. Other 3PLs may have state-of-the-art technology that integrates directly with your e-commerce marketplace or platform to provide all the necessary details required to streamline the fulfillment process for more automated shipping.

  • Packing: Since all the items are successfully picked, it’s the time to securely pack them for shipping. Different types of packing materials are used depending on the type of products to pack and shipped, third party logistics capabilities along with your brand preferences. Some 3PL providers charge extra for packing materials while others include them as part of the whole service. 

  • Shipping: The next step in the order fulfillment process is shipping your order. Some 3PLs partner with preferred carrier partners while others contact multiple carriers to compare shipping costs and find the most affordable pricing possible. Various carriers pick orders from 3PL warehouses to ship. The type of carrier and shipping speed depends on the third party logistics companies in UAE and their partnerships with these companies.

  • Returns: Many 3PL companies also offer return processing services. If a customer returns an order, 3PLs process the returns and restock or dispose of the item depending on their policies and your preferences.


Most Beneficial Third Party Logistics Services to Consider

3PLs offer a wide variety of services that are beyond shipping orders, depending on the provider you choose. Here are the most common services commonly offered by 3PLs:

  • Inventory Management

  • Fast Shipping

  • Distributed Inventory

  • B2B and DTC fulfillment

  • Returns Management

  • Advanced Data Analytics


Merits of Working with a Third Party Logistics Provider

There are unlimited benefits to outsourcing the order fulfillment process to third party logistics. Different providers have different capabilities, however, all 3PLs offer a wide range of solutions ultimately offering reliable logistics systems and assisting in maximizing profitability for a business.

  • Saves time and money

  • Leverage industry experience

  • Expand your reach

  • Inventory storage

  • Better management of logistics operations

  • Easier returns processing


Who Should Consider Outsourcing Logistics Services to a 3PL?

Nearly any business regardless of e-commerce platform, industry or product category can benefit from outsourcing fulfillment. Here are three signs, you are ready to outsource fulfillment to a 3PL:

  • Order volume is increased per month: While there’s no fixed number, if your order volume has increased and it's difficult to keep up in-house, it’s time to outsource to third party logistics. Increasing in-house manpower, storage requirements, packing and shipping can have a huge toll on your business. Hiring such companies saves both time and money.

  • Lack of storage space to store inventory: With an increase in order volume, you will need more inventory ready at any given time. If you don’t have enough space to keep your inventory safe, a 3PL warehouse can save you by providing a huge amount of space. This also helps you stay organized and manage inventory more reliably and efficiently.

  • If you want to follow 2-day shipping criteria: If you want to offer 2-day shipping services for your customers, third party logistics make it more feasible and affordable for merchants of all sizes.

Efficient order fulfillment services are an asset to many e-commerce businesses. In-house fulfillment may become expensive and cumbersome to manage. Third party logistics in India and UAE are the real saviors for e-commerce businesses who want assistance for inventory management and other logistics processes.