The Growing Role of 3PLs
“Today’s 3PL is not your grandfather’s 3PL,” said J. Paul Dittman, executive director, Global Supply Chain Institute at the University of Tennessee. “3PLs have expanded dramatically within the fundamentals of transportation and warehousing, but they’ve gone much beyond that. It’s no longer a guy who operates the warehouse for you; it’s a whole range of services that many companies are now expecting from a third-party provider.”
Third Party Logistics (3PL) providers offer their customers transportation and/or warehouse management systems, packaging design services that can yield more efficient shipping (and a reduced carbon footprint) and even warranty management services. 3PLs’ customers may look to them for global expertise, relying on their knowledge about international documentation, customs, regulations, freight forwarding services and duty optimization.
Many additional services offered by 3PLs help retailers move their products through the supply chain more quickly. “When the retailers look at their process of receiving product to getting it to shelf, they think, ‘If we did this upstream we could simplify the receipt and get it to shelf a lot faster,’” said Greg Aimi, research director at Gartner. So 3PLs will ticket and bag goods, move goods from bags to hangers and add RFID or security tags to merchandise.
If a 3PL implements kitting and postponement services, retailers and manufacturers gain flexibility in responding to customer demands. For instance, a manufacturer that produces phones with red, blue and green cases no longer has to ship 1,000 phones of each color in bubble packs to the warehouse. Instead, it will send the phones and cases separately—eliminating the bubble packs and making both parts easier and cheaper to transport—and have the 3PL assemble the phones at the warehouse in the quantities and colors that their retailers actually need. “They will move the materials up-stream, closer to where they have actual demand, and they will replenish demand on a more dynamic basis once they know what the orders are,” Aimi said.