Related Sponsors

How is 3PL (Third Party Logistics) Defined and Why is it Used?

Home » Logistics » Third Party Logistics » How is 3PL (Third Party Logistics) Defined and Why is it Used?

As more businesses get involved in the process of manufacturing and selling their products, they find the task of dealing with all aspects of the supply chain or logistics of it gets overwhelming. So what happens? They outsource all work to a third party. The goal of a third party logistics or 3PL company is to assist the company by managing the company’s complex distribution systems and requirements.

So why use 3PL? Well there are a number of reasons beyond what was described above. Some of these reasons may include:

• Saving time: It is a fact that by outsourcing all logistics and distribution to an outside firm will save the company time. This way the company can use this free time to grow their business and make it more profitable.
• Lack of Expertise: Many companies just don’t have the personnel to handle the load. They may have the staff to do it, but the staff may not be knowledgeable or experienced in all phases of this work. Therefore, to handle such a task would be insurmountable.
• Help with responsibility: In many cases, a company just may not be able to tackle all responsibilities involved in the logistics processes and procedures. So to accommodate the situation, they shift some of the responsibility over to a 3PL to help out. This way the work gets done within a reasonable time and efficiently.
• Revamp the distribution system: Some times a company can’t see the weakness in a system because the manager doesn’t look at everything objectively. By bringing in an outside firm to handle matters, the 3PL could find weaknesses and take steps to help the company overcome those weaknesses. The end result is a much more organized and fully-functional distribution system.

Next Page: How to Implement Third Party Logistics

Related Third Party Logistics Articles