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Third-party logistics (3PL) refers to an organization using outside vendors for parts of their supply chain, such as distribution, storage, and transportation.
When a business uses third-party organizations to store or ship their inventory, they’re using third-party logistics, or 3PL. Many brands and retailers choose to outsource parts of their supply chain to third-party vendors because it can save them time and energy.
3PL organizations take on time-intensive logistical tasks like sorting and managing inventory; packaging or assembling products; scheduling transportation or receiving calendars; and keeping inventory organized within the supply chain. Due to high warehouse costs, using 3PL can be a boon to organizations, especially small and midsize businesses.
3PL organizations also often have insider knowledge about supply chain and inventory management regulations that can help businesses stay compliant. A strong 3PL vendor acts as a partner to a business — helping them manage their supply chain, stay organized, and save money.