3PL Myths & Misconceptions Plus How to Measure Success

3PL Myths and Misconceptions

There are some common myths and misconceptions when it comes to using a 3PL provider. Here are a few you may have heard: 

Myth: “It’s too expensive to use a 3PL.”

In reality, using a 3PL can actually save your business money in the long run. A 3PL has economies of scale and can often negotiate better rates for things like warehousing and transportation. And by outsourcing logistics to a 3PL, you’ll have more time and resources to focus on growing your business, which can ultimately lead to more revenue.

Myth: “A 3PL will take over my business.”

A 3PL is there to support your business, not take it over. The idea is to work together to create a logistics solution that works for you. You’ll still be in control of your inventory and customer relationships. 

Myth: “I’ll lose control of my inventory.”

When working with a 3PL, you’ll have access to real-time inventory data, giving you more control and visibility over your inventory than ever before. Plus, 3PLs often have advanced inventory management systems in place, which can help you keep track of your inventory and reduce the risk of stockouts.

Myth: “A 3PL can only handle basic logistics tasks.”

3PLs have a wide range of capabilities, and many offer a variety of services beyond just storage and transportation. For example, many 3PLs can also handle things like order fulfillment, reverse logistics, and even eCommerce integration.

Why Do Companies Choose to Work With a 3PL Provider?

Companies choose to work with a 3PL provider despite the misconceptions surrounding the use of 3PL because it is often the most cost-effective solution for their needs. Not only can 3PLs negotiate better rates for warehousing and transportation, but they have also put in the money to develop a logistical infrastructure. While companies like Walmart might have the capacity to spend the cash required for such an infrastructure, many other companies do not. In addition to this, they are also logistics experts and can help you strategize the best approach for your business. 

What Is a Reason for Using a 3PL Logistics Partner?

Let’s go back to Sarah who runs “Fashion Avenue”. Before using a logistics provider, her business was growing quickly, and she found herself spending more and more time on manual tasks. Despite her best efforts, she was struggling to keep up with the volume of orders and was frequently running out of stock. But her day-to-day changed when she decided to partner with a 3PL logistics provider. The 3PL provider was able to take over the handling of her inventory, packing, and shipping orders, and coordinating with carriers. This freed up Sarah’s time and resources, allowing her to focus on growing her business. Ultimately, picking a 3PL logistics provider saved Sarah both time and money. And it can do the same for your business as well.  

What Is the Difference Between a 3PL Logistics Partner and a Broker?

A 3PL logistics partner is a comprehensive and integrated solution for your logistics needs, providing a wide range of services such as warehouse management, inventory control, transportation management, and other logistics services. They are a partner in your business and work closely with you to create a logistics strategy unique to your specific needs. On the other hand, a Broker is a middleman who connects shippers with carriers and other logistics providers. A broker is not responsible for the physical handling or storage of goods and typically provides less visibility and control over the logistics process. 

What Industries Use 3PL Logistics Partners the Most?

3PL logistics partners are the go-to solution for many industries that require a full-service logistics provider. They rely on the expertise and resources this logistical partner has to offer. Industries such as e-commerce and retail, manufacturing and production, healthcare and pharmaceuticals, food and beverage, automotive, industrial and heavy machinery, fashion and apparel, and chemical and hazardous materials all extensively use 3PL logistics partners to manage their logistics operations. 

How Do You Manage a 3PL Logistics Partner?

Managing a 3PL logistics partner effectively is crucial for a smooth and successful logistics operation. You should clearly communicate your logistics needs, goals, and expectations to the 3PL logistics partner, including setting performance metrics and service level agreements (SLAs) that both parties agree on. Performance should be continuously monitored against the agreed-upon metrics and SLAs, and regular data and reports requested to help measure performance, identify trends and make informed decisions. 

How Can I Monitor My Third-Party Logistics Partner Performance?

Monitoring the performance of third-party logistics providers is critical to ensure that your logistics operations run smoothly and meet your business needs. So how do you monitor your 3PL partner’s performance? 

  • Service Level Agreements (SLAs): For example, you might set an SLA that requires your 3PL partner to ship 95% of orders within 24 hours of receipt.
  • Key Performance Indicators (KPIs): For example, you might set a KPI to track the number of stockouts, the accuracy of orders, or the on-time delivery rate of your 3PL partner.
  • Data and reporting: You could request a report that shows the number of orders shipped, the number of orders with errors, or the average time it takes to ship an order.
  • Audits and inspections: These will help you identify issues and ensure the 3PL is following your agreed-upon procedures and standards.

Key Takeaways

Your business and your customers deserve the best. They depend on you to get their orders shipped on time and in one piece. Moving to a third-party logistics company for these needs allows you to keep your promises to those who buy your products. With this partnership, your orders can get there faster, with fewer mistakes, at a lower cost than if you were trying to achieve the same on your own. Meaning a 3PL solution is your ticket to keeping up with the competition! 

eCommerce Integration With 3PL FAQs

How Do You Integrate With 3PL?

Integrating with a 3PL logistics provider is a process that requires clear communication, collaboration, and planning. Start by reviewing your logistics needs, goals, and expectations with the 3PL logistics partner, including setting performance metrics and service level agreements (SLAs) that both parties agree on. Have a plan which outlines the logistics processes and procedures and includes details such as inventory management, shipping, and returns. Finally, monitor the performance of the 3PL logistics partner against the agreed-upon metrics and SLAs, and look for opportunities for improvement.

What is 3PL in eCommerce?

A 3PL will handle the warehousing, shipping, and fulfillment of orders for an eCommerce business. This can include tasks such as receiving and storing inventory, picking and packing orders, and arranging for shipping and delivery. Using a 3PL provider can also help eCommerce businesses focus on their core business, such as product development, marketing, and customer service, instead of worrying about logistics operations.

What Are eCommerce Integrations?

eCommerce integrations refer to the connections and links established between an eCommerce platform and other software systems or tools used to manage and run an online business. These integrations can help automate and streamline business processes. Here are a few examples of eCommerce integrations:

  • Payment gateways: PayPal, Stripe, Square 
  • Shipping and logistics: FedEx, UPS, DHL
  • Inventory management: ShipHero, TradeGecko, Stitch Labs, Brightpearl
  • Marketing automation: Klaviyo, Constant Contact
  • Accounting and finance: QuickBooks, Xero, Zoho Books
  • Customer relationship management (CRM): Salesforce, HubSpot, Pipedrive
  • Dropshipping integrations: Oberlo, AliExpress, Spocket

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