Learn More About Third Party Logistics Services
How Does 3PL Logistics Work?
Third party logistics (3PL) works by allowing businesses to outsource logistics operations such as storage, shipping, and fulfillment to a specialized provider. This enables companies to scale efficiently without the cost or complexity of managing these functions in-house. Here’s how the process typically works:
1. Inventory Is Received and Stored at Fulfillment Centers
The process begins when your products are delivered to a 3PL provider’s fulfillment center. These facilities are equipped for secure warehouse storage, labeling, and organization. Inventory is logged into a management system that tracks inventory levels in real time.
2. Orders Are Placed and Synced with the 3PL System
When a customer places an order, the information is automatically sent to the 3PL provider. Through system integrations, businesses gain supply chain visibility, allowing them to monitor stock, order status, and delivery progress.
3. Picking, Packing, and Order Accuracy Checks
At the fulfillment center, warehouse staff pick the ordered items, package them according to your specifications, and perform quality checks to ensure order accuracy. Automation and scanning technologies help reduce errors and speed up processing times.
4. Shipping and Transportation Management
The 3PL coordinates the most efficient carrier for delivery, using its network of transportation partners. Through expert transportation management and freight brokerage, your shipments are routed based on speed, cost, and destination.
5. Returns and Reverse Logistics
A comprehensive 3PL solution also includes returns processing. Returned items are inspected, restocked, or discarded based on your policy. This helps maintain customer satisfaction while streamlining reverse logistics workflows.
6. Ongoing Optimization and Risk Management
The 3PL company continuously monitors performance metrics like delivery speed, error rates, and logistics costs. With built-in risk management strategies and performance tracking, your business can adapt quickly to changes in demand, shipping conditions, or inventory needs.
What is the Difference Between 3PL and 4PL Logistics?
While both 3PL and 4PL involve outsourcing logistics, the key difference lies in the level of control and integration each provides within your supply chain:
- 3PL (Third Party Logistics): A 3PL provider handles the execution of logistics tasks such as transportation management, warehouse storage, order fulfillment, and returns processing. Businesses partner with 3PLs to manage specific operations while retaining overall control of their supply chain strategy.
- 4PL (Fourth Party Logistics): A 4PL provider acts as a logistics integrator that oversees the entire supply chain, including the management of multiple 3PLs. They focus on strategy, coordination, and optimization, often without owning physical assets. A 4PL offers a more hands-off solution, making high-level decisions about partners, processes, and technology.
What Are Examples of 3PL Logistics in Canada?
Imagine an ecommerce company that sells health and wellness products across Canada. Instead of managing its own warehouse, packing team, and shipping carriers, the business partners with a 3PL logistics provider like Trans Inter Logistik.
Here’s how the 3PL relationship works:
- Inventory is shipped in bulk to the 3PL’s fulfillment center, where it is stored and managed.
- When a customer places an online order, the 3PL receives the order details in real time through system integration.
- The 3PL team picks, packs, and ships the order using the most cost-effective carrier.
- The ecommerce company and its customers receive real-time tracking updates.
- If a customer returns a product, the 3PL handles the returns processing, inspection, and restocking.
This model allows the ecommerce brand to focus on marketing and growth while the 3PL handles all logistics — improving delivery speed, reducing overhead, and scaling effortlessly during busy seasons.
What is the Role of Freight Forwarders in Third-Party Logistics?
Freight forwarders coordinate the movement of goods across domestic and international routes, acting as intermediaries between shippers and carriers. In third-party logistics, they handle documentation, carrier selection, customs clearance, and ensure timely, cost-effective delivery from origin to destination.
How Can a Third Party Logistics Provider Help with Import and Export Logistics?
A 3PL provider manages the complexities of international trade, including customs documentation, compliance, duties, and freight coordination. This ensures smoother import and export operations, reduces delays at borders, and streamlines cross-border shipping.
What Are the Benefits of Using Distribution Centers for Order Fulfillment?
Distribution centers improve delivery speed by storing products closer to customers. They support efficient picking, packing, and shipping processes, reduce transportation costs, and help maintain optimal inventory levels across regions.
How Does a 3PL Company Support a Customized Fulfillment Strategy?
A 3PL tailors warehousing, order processing, and shipping to align with a business’s unique goals, sales channels, and customer expectations. This may include multi-location fulfillment, packaging customization, or service-level optimization based on demand.
