Third-party logistics (abbreviated 3PL, or sometimes TPL) in the logistics and supply chain management industry is a company’s use of third party software or third party business solutions to outsource elements of your company’s distribution and fulfilment services.
Often, these services go beyond logistics and include value-added services related to the production or procurement of goods, i.e., services that integrate parts of the supply chain. When this integration occurs, the provider is then called a third-party supply chain management provider (3PSCM) or supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.
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The Types Of Third Party Logistics
Third-party logistics suppliers include freight forwarders, courier companies, as well as other companies integrating & offering subcontracted logistics and transportation services.
3PL providers can be broken down into the following four categories:
- Standard 3PL Provider: The most basic and standard form of 3PL. This company will provide services such as to pack and pick, warehousing management as well as business distribution. These are seen as the basic forms of logistics.
- Service Developer: This type of 3PL service provider will provide advanced value added and unique services such as tracing and tracking, specific packaging as well as unique security systems. A solid IT foundation and a focus on economies of scale as well as scope will enable this type of 3PL provider to perform these types of tasks.
- The Customer Adapter: These type of suppliers will come in at the request of a client or company and they will essentially take over complete control of your logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically quite small.
- The Customer Developer: This would be the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.
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