A Year of Third Party Logistics (3PL or TPL)

This year has been very busy for the Proverb2 team in the area of 3rd Party Logistics projects for our retail and wholesale clients.

3rd Party Logistics is the use of an outsourced service provider to provide one or more of the following:

  • Warehousing
  • Transport
  • Fulfillment to end customer, either wholesale client or consumer

Benefits

The benefits to retailers & wholesalers of using 3PLs include:

  • Outsourcing allows the retailer/wholesaler to concentrate on their core business – buying and merchandising
  • Pre-integration – good 3PL providers will probably already have integrations in place with:
    • Carriers, so these do not have to be rebuilt for each of their clients
    • Wholesale clients, Many 3PL’s already fulfilled to larger end clients so they already know the relevant documents, labels and sign off procedures
  • Local knowledge of carrier services, customs & customer touchpoints

Projects

The projects that we have managed so far have been focussed on delivering cross organisation, back office solutions for:

  • A fashion retailer which has expanded their B2C online web presence into the Far East using a local 3PL provider. This solution went live in July.
  • A wholesale manufacturer fulfilling orders direct from their Far East factory to large US based retail client via a US 3PL warehouse and logistics provider. This went into production this month.
  • We are currently working on a solution to allow a retail client to sell its goods via a popular Far East online marketplace fulfilling from a global 3pl provider with a Far East warehouse.
  • We have also been helping for a local start-up 3PL provider, guiding them on their IT strategy for a system to manage their 3PL business. In the end, we have recommended they have a custom system built and put them in touch with a software house.

Golden Rules of 3PL projects

We have found few “golden rules” when embarking on a retail/wholesale 3PL project:-

  • Try to find a 3PL who already fulfils goods to your wholesale client using your preferred carrier – this will greatly reduce the amount of integration/dev work required
  • If your 3PL is overseas then it is beneficial to have a local client representative that can make decisions and knows how 3PL operate in that area. It is also useful to arrange project checkpoints that fit in with the local working day
  • As with all Wholesale projects make sure you allow time to get end client approval for any integration messages and business documents – nobody like a non-compliance chargeback!
  • Treat the 3PL like “black box”, review how they work in terms of Standard Operation Procedures but try not to get “in the loop” on their internal processes i.e. try not to get your systems involved in any way with picking, packing or dispatching the order, just leave it to them
  • Although they can customise their operating procedures, 3PLs have pretty long lead times on getting their IT systems customised. If at all possible, try to design the solution so they do not have to change anything at their end

Hope these are useful, if you would like any help with starting or managing an in-flight 3PL project then please contact  jon@proverb2.co.uk