Third party warehousing or third party logistics, often abbreviated as 3PL is the service, especially logistic services provided from a firm to its outsourced customer or the third party, for managing all or part of its supply chain management functions. Specialty of firms offering one stop third party management services apart from warehousing are cross docking, integrating operations or applications for customer in order to manage various levels within the department, management of inventory, packaging, freight forwarding and conducting management of products or service as well as monitoring transportation services. Based on the market demand the 3PL can customize their service and scale it down or up to different levels.
here are three basic forms of 3PL, the freight forwarders, the companies integrating logistics transportations developments and the courier companies. Together they are called 3PL providers. Third Party warehousing are part of the most basic type of 3PL provider too, where pick and pack as well as distribution also forms a part of the logistics functions of the enterprise. Advanced value added services such as specific packaging, cross docking, tracing and tracking as well as providing security systems through a string IT foundation forms a part as well. Besides the developers and providers, there are adapters as well who do not introduce any new model but upgrades the processes and activities to its highest level.
Customers prefer third party warehousing because it facilitates the functions of the supply chain management. There can be group or an individual behind. However, in the long run the ultimate focus is to conduct the services in an organized way and in more economical fashion. When any client avail the service, they are able to have complete control over different warehousing functions, where shippers and carriers are quite vital too. Shipping services are necessary for transportation of goods from one place to other and carriers provide transportation. Through a 3PL, shippers can have access to not one but hundreds of carriers at the same time. So clients need not search carrier providers themselves. This saves effort, time and a lot of cost.
Since the 3PL firms have experience of price negotiation and usually they have more skills in managing shippers as well as carriers, it is possible for them to settle the deal at reduced price. Administration of various aspects of the management of warehouse can also be conveyed through 3PL quicker because they know both the parties very well and they are aware of the requirements of both.
The administrative aspects of warehousing include data storage and management of arrival and departure of goods. This is a very important part of supply chain management. Monitoring the containers forms a huge part of this facet too. Affordable price of such services is necessary and it is obligatory that the firm managing these aspects would be responsible. Most clients like to have a party who would have the specific administrative skills. 3PL firms arrange such duties to the most skillful enterprise.