So, what exactly is a 3PL? In a nutshell, a Third Party Logistics Provider (3PL) is a company that offers outsourced logistics services to help businesses manage various aspects of their supply chain operations. These services can range from warehousing and distribution to transportation, inventory management, and even freight brokerage. For further clarification, the Council of Supply Chain Management Professionals (CSCMP) defines Third Party Logistics as:
“Outsourcing all or much of a company’s logistics operations to a specialized company… Over the years this definition has broadened to the point where these days, every company that offers some kind of logistics service for hire calls itself a 3PL. “
The CSCMP also has an excellent glossary of terms available for download.
3PLs streamline and optimize the movement of goods from point A to point B. By leveraging their expertise and resources, 3PLs can help businesses improve efficiency, reduce costs, and enhance overall supply chain performance.
One of the key benefits of working with a 3PL is flexibility. Businesses can scale their logistics operations up or down based on their needs, without the hassle of managing these complex processes in-house. This flexibility is especially valuable for companies facing seasonal fluctuations in demand or looking to expand into new markets. The decision to partner with a Third Party Logistics Provider often comes down to factors like the size of the operation, the complexity of the supply chain, and the strategic goals of the business. When managing logistics is taking up too much time and resources that could be better spent growing core business aspects, it might be time to consider enlisting the help of a 3PL.
According to CSCMP, 3PLs started popping up in the 1970s with intermodal marketing companies (ICMs). Since contracts for freight transportation had only two parties listed, the shipper and the carrier, the ICMs became the 3rd party involved in the contract.
In 2008, the term 3PL officially become a little more defined with the H.R. 4040 (110th): Consumer Product Safety Improvement Act of 2008.
This bill was created to establish consumer product safety standards and included 27 words that helps define a 3PL. The United States government, defined a 3PL as: “a person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.”
Over the next 40 years, the definition of a 3PL expanded to include the physical distribution of products, managing the logistics of the transportation and most recently to managing the entire supply chain.
3PLs play a crucial role in the world of logistics, helping businesses of all sizes navigate the complexities of supply chain management. Whether a small e-commerce startup is looking to expand, or a global corporation is seeking to streamline operations, partnering with a 3PL could be the key to unlocking new efficiencies and driving business growth.
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Learn more about what makes Keller Logistics Group and its affiliates the best choice for your company’s 3PL logistics needs. Contact us to learn more about our services and request a no-obligation quote. Call 419-780-3767 or return our online contact form today.