What Is 3PL and Why Do You Need It?

Nashville 3PL Company M&W Logistics

Every city has warehouses, but how often does someone consider what is kept inside those walls? The answer is most likely close to zero, but the answer is more interesting than you might think. The systems in place to keep these businesses moving and operating are often more complex than a company might have the time or capital to manage themselves.

This is where the term 3PL comes in: It stands for third party logistics. A company will outsource the storing and distributing of their products to a 3PL company for many reasons. Sometimes they don’t have the means of doing it themselves. Other times, it’s simply more advantageous.

 

What Does This Look Like?

There are many different forms a 3PL can take and many different services that can be offered. M&W Logistics, a Nashville 3PL company, is able to offer everything from storing a company’s product in one of their multiple warehouse locations, to consolidating shipments that wouldn’t fill an entire truck on their own. The result is lowered cost and less upfront capital because the client is able to make use of M&W’s existing infrastructure.

Purchasing inventory in large amounts is a great way for businesses to keep the price per item as low as possible. However, storing that large inventory can turn into a problem if the company doesn’t have access to their own warehouse. 3PLs such as M&W Logistics can provide a wide range of services that can be integral to companies without the means or desire to run their own warehouse. This can take the form of public warehousing, where various businesses’ items are stored under the same roof, or food-grade warehousing, specifically designed for the storage of food items and kept at regulatory standards guided by the Food and Drug Administration.

Learn how M&W Logistics can save you money by being your Nashville 3PL company.

Why Does a Company Need 3PL?

Since 3PL companies offer a great number of services, the reasons a company might use a 3PL are equally great.

Storage is one of the main services for a 3PL provider like M&W Logistics. A company that is seasonal in nature, for instance, might not need a consistent amount of storage space throughout an entire calendar year. With a 3PL, they could keep themselves fully stocked during their busy season and dial their needs back when things slow down. Or, if a company wanted to try out a new market, they could use a 3PL to store their materials without investing the large upfront costs of purchasing and entire warehouse. Likewise, if a company wanted to expand their distribution network while avoiding similar upfront costs, they might choose to utilize a 3PL provider.

Shipping provides a challenge for many companies. Without a large stock to transport, cost per item can increase to a point where it’s simply not profitable to make the journey. Freight consolidation is a great option for a company looking at outsourcing transport operations. Freight consolidation allows for containers from multiple businesses to be transported in one shipment. This reduces the cost of transportation, quickens the delivery time, and allows a business to provide regular, smaller shipments. The result is lower overhead for the company and reduced retail price for the consumer.

Where did 3PL Come From?

The source of the term 3PL isn’t known, but M&W has been providing 3PL services for over 40 years. This puts them at the forefront of the industry. One major factor in the expansion of 3PL services was the Motor Carrier Act of 1980, which deregulated the trucking industry. This created opportunities for smaller companies that were solely in warehousing were given more freedom to move into trucking. Likewise, with the increased competition, trucking companies began moving into warehousing. This integration, combined with the emerging technology boom of the late 80’s into the 90’s, set the groundwork for logistics companies to manage these various aspects together.

A 2017 study found that 90% of Fortune 500 companies make use of 3PL providers. These services are an integral part of running a successful business of any size due to their convenience, customizability, and cost-efficiency. Whether a company needs a third party warehouse or is considering outsourcing transport operations, M&W Logistics has the experience and expertise to help your company achieve its goals.

Want to see your Nashville 3PL company options? Visit M&W Logistics today.