3rd Party Logistics FAQs
What's the difference between 3PL and a Freight Forwarder?
A freight forwarder coordinates with multiple carrier methods including air, rail or highway to ship goods from one destination to another. Freight forwarders manage the relationships and important tasks in the shipping process: from negotiating freight changes to preparing shipping documents, but do not actually move the freight itself. They act as a liaison between carriers and companies looking to ship their products. 3PLs handle the entire supply chain, including picking and packing, warehouse storage, as well as shipping.
Why are Third-Party Logistcs Important?
Managing the packaging and shipping of products by yourself can be difficult and costly. And with the ever-growing influence Amazon has on the retail market, ecommerce stores need to offer fast and affordable shipping if they want to compete. 3PLs specialize in supply chain management, helping these companies streamline the shipping process for cost-effectiveness and better logistic efficiency.
How do you measure 3PL performance?
Once you have selected a 3PL company to handle your shipping logistics, it’s important to continually measure for performance by looking at different KPIs. One shipping KPI includes the rate of returns due to shipping damage or error. This KPI ensures there is a continued focus on shipment quality and accuracy. Another important shipping KPI to track is on time delivery. This KPI provides insight into whether or not there is a bottleneck in the current fulfillment process that needs to be addressed to provide maximum efficiency.
When should you use a 3PL?
If your ecommerce store has experienced rapid growth within the last year, it may be time to consider working with a 3PL company. Often times, companies partner with a 3PL when they are looking to scale their business without wanting to build and maintain their own warehouse in-house. Instead, they will look to leverage the expertise of a 3PL company to handle all shipping logistics.