Moving goods seamlessly from Point A to Point B – often across nations, oceans, and continents – takes a monumental global logistics effort. The supply chain process is akin to a well-orchestrated performance with individual players comprised of freight forwarders, third-party logistics providers, World Cargo Alliance (WCA) agents, manufacturers, distributors, wholesalers, and retailers.
Each plays a vital role in assuring that whether the goods are lumber supplies, jet engines, furniture, household goods, appliances, or other products, they travel from their origination point to their final destination on a timely, careful, well-orchestrated journey. One analogy? Think of the famous 1950s-era Rat Pack performing in Las Vegas; each performer was exceptional, yet different – but all of them contributed to the ultimate performance delivery.
So, in this series of blogs, we’ll look at the multiple stage players along the global supply chain. This time, we’ll focus on third party logistics providers or 3PLs, who manage and direct all aspects of the supply chain performance.
The “Producer:” Third-Party Logistics Providers Have Full Responsibility for the Essential Steps in the Process
When you hit the movie theater or stream online to watch a new flick, the film action flows with ease. But behind the scenes is a cast of hundreds, at times thousands. Some are lead actors, others supporting actors, others “extras.” But there are also behind-the-scenes players in casting, costumes, make-up, sound, lighting, set design, scriptwriting, cinematography, and more.
How is the flick put together in such a smooth fashion? How is chaos avoided, deadlines met, and the final product brought successfully to market? It’s all about the film’s producer, a conductor of sorts who manages all facets of film production including selecting a top director, a creative lead who, in turn, manages that entire process from pre- production through the final editing.
What is 3PL
In the supply chain world, a third party logistics provider or 3PL is akin to a producer – with full responsibility for getting your goods from Point A to Point B, and for many essential steps in the process. For more on the 3PL meaning, read on…
Think of a third-party logistics provider as a value-added resource integrated into many aspects of the client’s business. 3PL companies employ a full team of people on the ground to set up and handle supply chain needs. For example, a 3PL often can receive and process orders directly from a customer’s sales channels. In addition, a 3PL can handle products before they’re shipped – preparing them for the journey. That might involve such hands-on warehouse activities as storing goods, picking, packing, and fulfilling orders. Also, a third-party logistics provider can put products back into inventory as customers opt to “return” the goods.
A third-party logistics team is skilled at arranging any needed transportation, whether by plane, train, ship or truck. Team members will prepare and handle all paperwork for both domestic and international shipments. These logistics experts know the “ins” and “outs” of shipping rules and international customs regulations. At times, on a complex project or one with demanding supply chain issues, the 3PL may, alternatively, hire a freight forwarder to handle that transportation process. That frees up the 3PL to tackle other supply chain tasks to make the project a success.
One added benefit is that 3PLs are skilled at providing strategic logistics solutions that go far beyond shipping – and help solve the customer’s potential or existing business issues. For instance, they might offer ways to better control the customer’s labor costs or suggest an inventory management solution. Customers also have the flexibility of hiring a 3PL to handle every aspect of their supply chain process, or alternatively, just one segment. Third party logistics providers can also assist in handling strong seasonal demand for products.
3PL vs. Freight Forwarder
the difference between a third-party logistics provider and a freight forwarder? Think of a freight forwarder as a broker-type service that specializes in moving goods between two locations. A 3PL handles that same function but also takes on a much broader range of logistics services – touching many more parts of the supply chain process. Think of a 3PL as a jack-of-all-trades and value-added support solution for companies, who thus don’t need to hire staff to do those tasks. When hiring a 3PL, though, it’s good to ask these types of questions:
- How can you assist with the supply chain needs of my specific business operation? The key word here is “specific.”
- Can you interface with my processes and systems? Do you use advanced logistics technology and is that, in turn, compatible with that used by my supply chain?
- What’s your package service expertise? Can you handle all the tasks associated with preparing my products for shipping? Can you also manage the goods returned by my customers?
- Do you have warehouse capabilities, how much space and where?
- What types of “boots on the ground” activities do you handle? What’s the scope of your operation domestically and internationally?
- Do you specialize in any specific aspect of the supply chain process?
Overall, it’s important to hire a 3PL that truly seeks to understand your specific business operation and needs. Reputable providers won’t mind answering all your questions. We hope you’ve enjoyed this Part 2 of our series. The next blog in this series about supply chain players will focus on World Cargo Alliance (WCA) agents.
About Prime Logistics Group
One of four divisions of Prime Group, an international logistics services conglomerate founded in Ecuador in 2001, Prime Logistics serves to streamline, optimize, and expedite freight to and from the U.S. for a wide range of major industries.
With offices in Miami, New York, Los Angeles, Bogota, Quito, and Amsterdam, Prime Logistics capitalizes on its long-time relationships with the major air carriers, ocean lines, and truckers to offer competitive rates in securing ample space to destinations all around the world.
For information, call 305-592-2044 or visit www.PrimeLogisticsGroup.com.