What is 3PL logistics? [Choose your provider]

Nowadays, many companies do not have sufficient means and resources to carry out the internal storage and distribution of their products. The solution of logistics outsourcing is available to them by calling on a logistics provider also called a 3PL provider.

According to the "26th Annual Third-Party Logistics Study", conducted by renowned organizations (such as Infosys Consulting, Penn State University, Penske Logistics and Korn Ferry), 90% of companies that have used a 3PL provider declare that their relationships with their 3PLs have generally been successful because the latter has helped them improve their service and satisfy their end customers (Study available here)

In this article, you will find a precise analysis on: what is 3pl logistics, the particularities of a 3PL provider as well as the advantages and disadvantages of requesting it.

What is 3PL? [Logistics definition]

3PL logistics (from English: Third Party Logistics), also called outsourced logistics or third-party logistics, concerns services subcontracted by a company to a service provider. This concerns logistics, storage, order preparation or the management of the transport of goods.

When a 3PL service provider intervenes in the supply chain, he therefore becomes responsible for handling the company's products and distributing them to the end customer. He then has the role of an intermediary between the company and the end customers.

What is the difference between a 1PL, 2PL, 3PL, 4PL, 5PL?

Logistics service providers are classified according to the degree of their involvement in the logistics and transport chain. For this classification, we use the term PL (from the English Party Logistics) which means “logistics suppliers” attached to a number specifying the services provided during its mission:

1PL (First Party Logistics)

As its name suggests, it is a first-degree outsourcing, that is to say only transport services (outsourcing of transport through agencies with drivers and fleets of vehicles necessary for the transport some products). The customer retains control and control of the logistics warehouses.

2PL (Second Party Logistics)

Here, in addition to transport, the service provider is also responsible for the storage of the customer's goods.

3PL (Third Party Logistics)

The 3PL service provider provides transport and storage management, but also the management and organization of these two activities, allowing the client to focus on its core business.

4PL (Fourth Party Logistics)

A 4PL provider acts as a consultant/auditor of 3PL providers. Its mission is to optimize and improve the activity by using a 3PL since it does not have its own logistics infrastructure. Its role is limited to advising.

5PL (Fifth Party Logistics)

These are all the services provided by the 3PL and 4PL provider.

Which type of service provider best suits your needs?

It depends on your ability to be able to manage your internal logistics in a sustainable way. Indeed, a small company is generally more likely to use the services of a 5PL provider, while a large company generally hires a 1PL provider because it has sufficient resources to manage its own warehouses.

What are the differences between a 3PL and a 4PL?

The main difference between a 3PL provider and a 4PL provider is in the physical resources they have.

The 3PL service provider has a structure for the storage of goods as well as a fleet of vehicles, while the 4PL only takes care of the management and supervision of logistics activities. As a result, the 4PL service provider works with a network of service providers (logistics and/or transport) to whom it delegates the tasks according to the needs of the client and the profile of each service provider.

Advantages and disadvantages of a 3PL provider

First of all, logistics management takes time and effort. This is why the fact of soliciting a 3PL provider allows companies to be able to focus their energy elsewhere and in particular on their core business.

On the other hand, working with a 3PL logistics provider means that you do not have to bear any costs whatsoever (structure, staff, IT, etc.) and thus save money in the short and medium term.

Last but not least, outsourcing logistics will allow you to offer more competitive shipping rates. Generally, 3PL logistics providers offer competitive shipping rates thanks to their diversity of customers, large volume of goods and their network of distribution providers.

However, certain disadvantages must be taken into account when outsourcing logistics such as the limited control by the company using the services of a 3PL.

A risk of strong dependence on its logistics provider can lead to a loss of service improvement or cost reductions. In the event of an increase in activity, it is essential that the company talks with its 3PL provider in order to find new solutions for improvement and not be more expensive than the solution of internal logistics.

How to choose your 3PL provider?

When choosing your 3PL logistics provider, here are the main things to consider:

Les prix

Les tarifs appliqués par le logisticien reposent sur différents critères tels que : le type de marchandise, la volumétrie associée, le degré d'urgence des envois et de leurs destinations.

La capacité d'adaptation

Il est nécessaire d’évaluer la capacité du prestataire logistique à s'adapter à vos différents besoins logistiques. La réactivité face à une hausse de votre activité est un élément clé pour la croissance durable de votre entreprise.

La technologie / l’informatique

Appuyez-vous sur un prestataire logistique utilisant des technologies et automatisations avancées pour mener à bien leurs processus (réceptions, stockage, préparations de commandes, expéditions…), notamment grâce à la logistique 4.0.

La réputation / l’image de marque

Renseignez-vous sur les références de votre prestataire 3PL. En effet, cela peut être un bon indicateur comme le fait de disposer d’une bonne stabilité financière tout en offrant une bonne qualité de service.

Conclusion

Vous l’aurez compris, faire le bon choix du prestataire 3PL est décisif pour l'avenir de votre entreprise. C'est pourquoi il est indispensable d'évaluer tous les critères évoqués précédemment et ne pas se baser uniquement sur la meilleure offre financière.