Understanding Services Provided By Third-Party Logistics

Knowing the terminology of a warehouse is important for your business, yet logistics can be confusing. Below are nine terms that will help you better communicate your goals to the provider, and, ultimately, understand the cost of your business. Here are some common services and term used in the word of warehouse management.

3PL

A third-party logistics, or 3PL, is a specialist company that provides a range of distribution, transportation, picking and packing, inventory forecasting, storage, and fulfillment services. Third-party logistics providers allow your business to outsource some or all of your supply chain and logistics operations. By outsourcing logistics needs to a specialized company with superior service, you are free to focus on your core business.

Palletization

A pallet is a flat platform used as a foundational structure for storing inventory. Cartons or cases of special goods are stacked on the platform and bundled together, then used for shipment or movement as a group. Palletization is the process of arranging cartons on the pallet to maximize stability and special efficiency. Pallets are used for storing and transporting inventory because they allow dozens of boxes to be moved at once with the help of a forklift or pallet jack. Retailers usually receive and store goods in palletized form so they can rearrange the inventory faster and store it more concisely.

Receiving

When using a 3PL, you will need to send your inventory to that 3PL’s fulfillment center(s) in order for them to begin processing orders for your business. All 3PLs have their own process called receiving, to obtain and store inventory in the fulfillment center. This often includes storing items in a designated area/location of the warehouse and inputting these locations into an inventory management system to help keep accurate inventory counts of all products.

Picking

The fulfillment process ultimately begins with picking. When your order is entered into a 3PL’s WMS (warehouse management system), a packing slip is created that gives the locations and quantities of each item ordered. 3PL team members then collect the products from their designated location.

Packing

With all the picked items in hand, the 3PL team prepares the products for shipment. This includes choosing the best packing materials to protect the products and keep the packages as small and light as possible to save your business money. This packaging can include but is not limited to, boxes, bubble wrap, and polybags. It also depends on your preferences and what the 3PL has in stock. Some e-commerce sellers choose to use custom packaging to highlight their brand.

Kitting

Kitting is the process of taking related products with different SKUs and combining them to create a new SKU or product. The warehouse kitting involves fulfilling customer orders by pre-assembling individual items into kits that are ready to ship right away rather than picking them individually. Kitting is a great way to increase efficiency.

Drayage

As part of the container shipping industry, drayage is a specialty logistics service that carries freight over a short distance via ground freight. In short, Drayage is the transport of containerized cargo, often part of a longer overall move of products from a ship to a warehouse. 

Cross-Docking

Cross-Docking is the practice of moving products directly from the receiving area to the shipping area for distribution, rather than being stored in the warehouse for a period of time.

E-commerce Fulfillment

Simply put, e-commerce fulfillment is the part of your e-commerce operation that delivers your products to your customers. This process includes several different operations. The 3PL accepts product shipments from your manufacturers and enters them into their inventory systems, provides storage, packs them, and ships them out. It is a crucial element of your success in online retail.

Have a question about the terms above?

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