The terminology in the logistics space can be confusing if you are new to or unfamiliar with the industry. For example, a third-party logistics company (3PL) and a transportation company might appear to be the same.
However, when you take a closer look at the services offered and how they impact the supply chain for your organization, you can see that they are very different. What are the differences between a 3PL and a transportation company? How can a 3PL help my company solve its logistics problems and help my bottom line?
When you use a 3PL to handle the logistics for your organization, you get to utilize their expertise and resources across the supply chain. Using their expertise allows you to get your product to your customers quickly and accurately. In addition, depending on your organization's needs, a 3PL partner can manage portions of your entire logistics and supply chain requirements.
- Shipping (International and Domestic)
- Contract Packaging
- Order Fulfillment
- Clean Room Handling
Having one partner instead of many to help your company out can help keep your operations streamlined and cost-effective. In addition, using a 3PL allows organizations to focus on their core business and not on the complicated logistical issues involved in the supply chain.
A 3PL can handle the day-to-day activities needed to get your products to your customers cost-effectively in a timely manner without putting a strain on your company's resources. Your employees should be focused on your business, not on logistics.
Inventory management and order processing can help streamline your fulfillment process. Efficient fulfillment allows you to ship more products quickly and cost-effectively without putting a strain on your company's internal resources.
Related: Benefits of Supply Chain Management
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Transportation Company Services
A transportation company transports freight from one location to another using one carrier or multiple carriers. From the time a product leaves a warehouse until it reaches the next warehouse in the supply chain is the domain of a transportation services company.
Transportation companies can utilize their relationships with carriers and buying power to negotiate better rates than a single company can on their own. In addition, because they can partner with multiple carriers, they can overcome supply chain issues caused by many factors.
Transportation companies know the regulations, costs, documentation, and financial factors involved in moving goods between locations. Understanding these regulations is especially true in international shipping, where documentation, tariffs, and other factors can impact the cost and speed at which you can ship goods.
Getting your goods from point a to point b is an integral part of the supply chain puzzle. But it is only part of the puzzle that your organization will face when overcoming logistical obstacles.
Comparing 3PL Services to a Transportation Company
A 3PL may partner with a transportation company to help ship goods from one location to another. Also, a transportation company may refer a customer to a 3PL who can assist them with the logistical aspects of their supply chain.
Transportation companies focus on shipping goods from one location to another, both domestic and internationally. In addition, they are responsible for getting a product from one warehouse to another.
Inside the warehouse, the management of the product is where a 3PL company can have a tremendous impact on the logistical operations of an organization. For example, picking and packing orders quickly and accurately for fulfillment allows companies to turn their orders around quickly and meet the following day's delivery requirements, which has become commonplace.
A 3PL partner knows the ins and outs of logistics and the supply chain from the beginning to the end. They can use their expertise to anticipate where potential problems might arise with the delivery of your product before they happen. Their insight can also save your organization wasted revenue when navigating the complexities of becoming logistically efficient.
3PL Allows You To Maintain Core Competencies
Up and coming companies use 3PL companies because outsourcing part or all of the logistic operations allows a company to focus on its business, not the logistical side.
A 3PL is a trusted partner who can manage part of your entire logistical operations and supply chain. They can also be a single point of contact instead of dealing with different vendors providing different services in the supply chain.
It's easier to maintain costs when working with one vendor over multiple vendors. In addition, a 3PL can have leverage when dealing with individual aspects of the supply chain, like warehousing, fulfillment, or shipping, to get lower rates.
A 3PL can manage the infrastructure, capacity, and training of employees necessary to move your product through the supply chain quickly and efficiently. Their operational expertise lets your staff focus on your company and not the hurdles that pop up frequently in the logistics of the supply chain.
If you're unfamiliar with logistics and the supply chain, a 3PL and a transportation company might look similar. However, a 3PL partner can help your organization with every step in the supply chain. On the other hand, a transportation company will focus on getting your product from one location to another.
You can rely on a 3PL partner to perform many tasks that will help streamline the inventory process and the distribution of your goods. Also, their expertise in logistics aspects can help your company fulfill your orders quickly and efficiently. Effective fulfillment practices get your goods in the hands of your customers promptly.
A 3PL partner can be a single point of contact for you, your organization, and the supply chain's many facets. As a result, you don't have to spend time and money working with multiple partners at various points in the supply chain. Instead, 3PLs can save money on your bottom line as they can leverage their relationships with their partners at different stages of the supply chain to get better pricing and service.
Most importantly, by using a 3PL partner, your organization can focus on building your business, not on the logistics aspect, allowing your team to concentrate on your core competencies.
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