TO 3PL, OR NOT TO 3PL?
When it comes to managing your e-commerce fulfillment, here are some items to consider before partnering with a third party.
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BY STEPHEN (STEVE) T. HOPPER, PE
ll of us make decisions about what tasks we are willing to do ourselves and what tasks we would rather hire someone else to do for us. Businesses commonly make insource-versus-outsource decisions too, and one of the key decisions for an e-commerce business is whether to outsource logistics operations to a third-party logistics (3PL) company. Since the rise of 3PLs in the 1970s, the term “3PL” has evolved to mean different things to different people, even to the point of becoming ambiguous. Just as there are many types of warehousing and distribution operations, today there are a variety of generalized and specialized 3PLs in the marketplace. Because 3PL services vary, businesses can outsource their
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supply chain functions and pay only for what they need. This trend, along with the rise of e-commerce over the past two decades, has resulted in hundreds of 3PLs that specialize in providing e-commerce fulfillment services. Deciding whether a 3PL makes sense for your e-commerce business can be a challenging exercise, let alone deciding which 3PL is the best fit. E-commerce businesses can select from an extensive menu of 3PL fulfillment services, in nearly any combination. For example, on the warehousing and distribution side, these services include: receiving; storage and physical inventory management (tracking, cycle counting, etc.); order picking; sorting; value-added services (VAS, such as kitting, light assembly, personalization, gift wrapping, packaging, and labeling);
packing; shipping; and reverse logistics and returns. When it comes to inbound and outbound transportation, 3PLs commonly offer additional services, including: carrier and freight procurement and management; fleet management and routing optimization; freight forwarding, consolidation, audit, and payment; carrier rate shopping; customs brokerage; shipment tracking; and last-mile delivery. It’s also common for 3PLs to complement warehousing, distribution, and transportation services by offering additional support services, including: Management and optimization of inventory (forecasting, procurement, replenishment, etc.) Vendor compliance Inbound and outbound carrier compliance Accounting functions Customer service (such as a call center, order entry, and return authorizations)
