Third Party Logistics (3 PL) – An Ultimate Guide to Attain Success

Third Party Logistics (3 PL) - An Ultimate Guide to Attain Success

Have you ever wondered how businesses conquer the complexities of modern supply chain management? How do they tackle 3rd party logistics challenges in supply chain management while staying ahead of the technology curve and meeting customer demands? If you’re seeking answers to these questions, that guides businesses through these intricate, look no further. 


This blog post is your roadmap to unveiling the power of (3PL) third-party logistics in supply chain management. By the time you finish reading, you’ll have a clear understanding on how to make the most out of 3PL services to overcome challenges and achieve success in your industry. Let’s embark on this enlightening journey together.

An Overview of Third-Party Logistics: What Do You Need to Know About 3PL?

You might have come across the term “third-party logistics” or 3PL in supply chain management, but what does it mean for your business? It’s all about teaming up with experts to manage storage, logistics, and supply chain tasks. Picture services like warehousing, transportation, and order fulfillment – all streamlined by these pros. They’re like a strategic partner for industries like manufacturing, retail, and e-commerce. With 3PLs by your side, your business can simplify operations, reach new customers, and tap into cutting-edge technologies. It’s like having a professional squad to enhance your business’s performance and growth.

Key Functions of 3PL Services

Discover how 3PL services play a crucial role in modern supply chain management. From managing transportation to navigating global shipping complexities, and employing advanced technology, explore the key functions that drive efficiency and success in businesses.


When it comes to moving goods from one place to another, 3PLs handle the process. They work with carriers, group smaller shipments together (like putting different items in the same truck), and manage important documents like payment and insurance. They can also work with private delivery fleets, making sure everything gets where it needs to go.

Partnering with a 3PL in supply chain management can help make transportation smoother and less expensive. They find ways to make things work better and create solutions for tricky supply chain problems. With their connections to different parts of the supply chain, 3PLs can often let you see exactly where your things are as they travel.

Global Shipping 

Shipping things across the world can be complicated and tough for businesses. 3PLs are experts at handling the whole global shipping process, which includes stuff like customs rules, getting items on ships or planes, and putting shipments together to save time and money. As if they’re a representative of your business, 3PLs in supply chain management make sure all the rules are followed, costs are taken care of, and things go according to the plan.

Information Technology

3PLs rely on advanced technology to manage various aspects of the supply chain, from online shopping and customer interactions to orchestrating movement of goods and overseeing warehouse activities. They leverage tools like Transport Management Systems (TMS) to streamline operations.


A TMS is like a digital conductor that coordinates different parts of transportation, ensuring that shipments move smoothly from point A to point B. This technology helps 3PLs organize routes, optimize truckloads, and track shipments in real-time. It’s a way of making sure everyone involved knows where items are during their journey through the supply chain.


By utilizing TMS solutions and other technology, third party logistics enhance visibility, efficiency, and collaboration across the supply chain, ultimately leading to improved customer satisfaction and better business outcomes.


Challenges in 3PL Supply Chain Management

In recent years, third-party logistics providers face several challenges and high market demands in the supply chain ecosystem. Yet, these hurdles don’t make building an efficient shipping process any easier. Let’s discover the challenges in the 3pl supply chain and their impact on overall supply chain management and logistics operations.


In the past, 3PL providers could manage tasks manually. Today, as companies scale up, this approach is no longer feasible. Automation is rapidly becoming essential. Retailers and 3rd party logistics in supply chain management are investing heavily in warehouse and delivery automation due to worker shortages and declining productivity. Walmart is even developing a drone network for last-mile deliveries to improve delivery economics and transition to same-day delivery.

Supply Chain Connectivity

3PL providers operate within complex ecosystems spread across large areas. Connecting all the data from warehouses, distribution centers, shippers, and fleets is challenging. Creating an integrated logistics ecosystem is crucial for understanding and optimizing delivery operations.

Hyperlocal Fulfillment and Efficiency 

Opening fulfillment centers near cities boosts delivery capacity, but urban real estate is often costly. Automation can help, but it comes with expenses. Automating various supply chain aspects, like routing and fleet management, can significantly enhance efficiency.

Performance Measurement and Improvement 

Understanding the impact of delivery on customer satisfaction is vital. Many 3PLs struggle to track and measure this impact, hindering customer relationships. Benchmarking and improving every supply chain step is essential for meeting expectations.

Cost Savings Optimization 

For many 3rd party logistics, rising shipping costs and labor expenses disrupt logistics operations. Balancing efficiency and cost is essential. Here are three ways to introduce cost savings into 3PL Logistics:


  • Optimize Truck Capacity Ensure trucks are dispatched fully loaded. Maximizing truck capacity reduces the number of trips required, saving fuel and resources. For instance, sending out a truck carrying products from multiple shippers in one go increases efficiency.

  • Optimize Route Efficiency Utilize route planner apps to decrease fuel consumption and delivery times. Efficient route planning ensures deliveries are made using the shortest and most economical paths. By avoiding unnecessary detours, fuel costs are minimized.

  • Improve Onboarding and Driver Retention Enhance the training process for drivers and dispatchers. The faster they learn the operations, the quicker they become productive. Moreover, investing in driver retention initiatives, such as better working conditions and benefits, leads to experienced staff, reducing turnover costs and maintaining operational efficiency.

Navigating Logistics and Supply Chain Challenges with 3PL Software Solutions

As your supply chain management evolves, embracing the right tools becomes pivotal to success. Whether you’re managing operations with pen and paper or utilizing complex logistics software, the need to adapt swiftly to seize new opportunities is paramount.


Once you’ve recognized your business needs, the next step is finding a logistics solution that fits like a glove. Your 3PL transportation management software should incorporate the following:

Seamless Integrations 

Your technology should act as a bridge, enabling different systems and units to collaborate seamlessly. This coordination among different parts of your operations enhances efficiency. 


Just like a well-coordinated team achieves more together, these integrations enhance your business’s efficiency by ensuring that every aspect of your operations contributes to a cohesive and streamlined process.

Business Insights and Performance Metrics 

Standardizing data measurement across various sources, both inside and outside your business, is crucial as it gives you valuable insights. This empowers you to make informed decisions, much like a navigator relies on accurate maps to reach their destination. Accurate metrics help you understand your delivery performance and where improvements are needed, allowing you to make strategic decisions that drive your business forward.

Efficient Automation 

Automation of delivery processes accelerates operations in supply chain management. By reducing manual tasks and errors, automation speeds up processes while maintaining flexibility. Just as a powerful engine ensures a smooth ride, efficient automation powers your logistics, helping you meet demands efficiently and respond to changes effectively.

Enhancing Shipper and Customer Experience 

Shippers rely on their 3PL partners to deliver exceptional experiences to customers. This includes branded deliveries, transparent tracking, swift feedback loops, shorter delivery windows, and simplified returns. Effective logistics software addresses these needs and optimizes associated costs.

Boosting Dispatcher and Driver Efficiency 

Efficiency in dispatch and driver management is vital for a smooth logistics operation. The right 3PL software or driver app acts as a digital ally, simplifying tasks like onboarding and driver data management. This streamlined approach accelerates operations, allowing dispatchers to allocate resources more effectively and drivers to focus on timely deliveries. 

What to consider when selecting a 3PL provider

There are countless third party logistics providers to choose from and choosing the correct one for your business is essential. It is important to remember that, when you work with a 3PL, you are adding an extension to your business, so choose wisely.


Here are a few things for you to consider when making a 3PL decision:

Business volumes

Evaluate your organization’s inventory and typical business volumes. Choose a 3PL logistics provider that can handle your current operations and scale should your processes increase or decrease.

References and past performance

See references from the 3PL’s current customers to get a real sense of what it’s like to work with them. Pay attention to their ratio of on-time versus delayed deliveries, how they handle problems, and how they communicate with their customers. It is a good sign when they have long standing relationships with their customers; it means they build positive, productive connections that are mutually beneficial.


Look at the technologies your business uses and pick a 3PL transportation management system that is compatible with them. You want to be sure that your chosen 3PL supply chain tech solution can work as seamlessly as possible with your current business operations.

What’s Next?


Third-party logistics in supply chain management is a wonderful way to help your business succeed. Without any doubt, they can certainly help take your business to the next level. With the right 3PL partner, businesses can unlock new levels of convenience, cost savings, and success, making it an attractive option for companies seeking to optimize their supply chain operations.


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