Third-party logistics providers (3PLs) play an important supply chain role for their clients. Essentially, 3PLs receive your products from your suppliers and store them at their distribution centers. They then pick and pack products to fulfill the consumer and retail orders you receive, ship those orders out to your customers, and handle any product returns that may occur.
There is a lot that goes into performing each of these tasks, some of which is detailed below. To gain a more in-depth understanding of the services a 3PL provides and how it may help your business, read our article on “What is a 3PL?”
Regardless of where your goods are produced, they can be sent to your 3PL. Upon arrival, your 3PL team will unload your products and “receive” them into their facility so they are available for sale to your customers. The receiving process typically includes some checks and balances to ensure all the products you ordered and paid for are delivered by your suppliers. This is a critical function to ensure your inventory counts are accurate throughout the supply chain.
After your products are received, they will be stored in your 3PL facility and available for sale. 3PLs approach this differently, but all of them have some process in place to store your product where it can be retrieved and used to fulfill orders. The number of SKUs and units you have will often determine how a 3PL stores your inventory as they will want a setup that is as efficient and straightforward as possible.
Pick and Pack Orders
Most 3PLs will ask for regular sales forecasts from their clients, and some will require it. This is something you should do if you don’t already. Based on your sales forecasts, promotions you may run, seasonal spikes, and historical order data, your 3PL will staff and plan accordingly to pick and pack the products needed to fulfill both your consumer and retail orders.
These functions are often viewed as the core of what a 3PL does for its customers. On the surface, it seems simple and straightforward, but there is a lot of analysis and planning that goes into being able to perform these tasks well, and results in your orders being accurate and completed in a timely fashion.
Shipment of Orders
After orders are packed, they are routed to the shipping department where they are picked up by a small parcel carrier (like USPS, UPS or FedEx), or they are sent to retail customers who typically arrange for the trucking of these products with the carriers of their choosing. Your 3PL’s function is to ensure orders flow to the correct carrier trailers and to make sure orders have been prepared to meet all of a retailer’s routing requirements.
Retail order routing can be very complex and require many unique processes and functions to ensure it is done correctly. A good 3PL partner can save you tens of thousands of dollars in retailer non-compliance penalties, while a 3PL that doesn’t do well in this area can cost you just as much.
Returned Product Processing
Most 3PLs will process returned orders for their clients. The common challenge with consumers returning orders is many will not comply with the return order directions you ask or require of them. Often, this means products will show up at your 3PL without supporting data that helps identify the customer and order the products belong to. This can really slow down the return process and become expensive for you.
A good 3PL partner will work closely with you to develop, implement, and execute a returns strategy that makes sense for your product type and typical returned order volume. Oftentimes, it will be up to you to direct the 3PL on which returned products can go back into inventory and which ones need to be discarded or donated. There isn’t a one-size-fits-all solution for returns, as each client tends to have slightly different needs.
Partner With the Right 3PL
Order fulfillment is core to every company selling goods. Partnering with a 3PL that can prove they have expertise with your product type, industry, sales channels, and unique requirements will benefit you and your customers as your orders are flawlessly picked, packed and shipped!