Third-Party Logistics: How It Works

Third-party logistics is the outsourcing of your business’s supply chain division. It helps your business to focus on the key components instead of focusing on the transportation, warehousing, and fulfillment services. 

Manufacturing/ Production enterprises use third-party logistics to reduce expenditure and save budget. Third-party logistics are better equipped in performing logistics and can handle large quantities to stock.

In short, third-party logistics will take care of everything that comes between the point of origin of the product and its point of consumption.

Transportation and Warehousing

The first step performed by the 3PL provider is to provide transportation to the products to the warehousing facility from the manufacturing plant. 3PL includes warehousing to ensure easier management because this allows the 3PL provider to have full knowledge of how the stock is arranged.

Warehousing facilities can exist in multiple locations to allow for easier distribution of the product. Depending on the type of product stock the warehouses can have cold storage and other facilities to keep the product from spoiling. 


Not only do they provide transportation and warehousing but they will also pack the products. The 3PL provider will pick the product and pack them in their packing plant. The packaging of the product will be according to the requirements of the enterprise.

However, the 3PL provider will be packing the product into pallets that allow maximum efficiency in transportation and warehousing of the stock. This service allows the business to outsource the packaging division to a dedicated packer while allowing the 3PL provider to have custom pallet size.

Inventory Management

The 3PL provider will also manage the inventory of your enterprise’s stock. The 3PL provider will keep track of the sales figures and take steps to restock the inventory. To ensure seamless operation you and your 3PL provider need to be linked via a cloud software or database so both parties have real-time data available 24/7.

Fulfillment Services

3PL providers also provide fulfillment services, allowing businesses that have outgrown their warehouse and shipping infrastructure to keep shipping orders. The 3PL provider will manage the business’s e-commerce website.

The 3PL will receive the order on the website or any other sales platform. Then they will start the order fulfillment procedure. They will signal the nearest warehouse to find the product. Then the product will be picked by the delivery worker and delivered to the customer. 

The time of delivery will depend on the location of the customer and whether there is a fulfillment warehouse nearby. Thanks to multiple warehousing locations most 3PL providers have started same-day deliveries.


With customer satisfaction being the top priority of every business, return policies have become quite flexible. To accommodate returns 3PL providers have reverse logistics. If the customer wants to return a product, they can fill a form or call the helpline of the e-commerce store. 

The 3PL will collect the product and assess it for any damage. If it is not damaged they will repack it, so it can be available for purchase again. This saves time and reduces losses for the business.

3PL providers offer a wide range of services depending on the requirements of your business. The workings of the 3PL mentioned above are offered by almost all 3PL providers. Read more about 3PL and how it fits into the supply chain at

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