The Procurement Glossary » Third-Party Logistics (3PL)

Third-Party Logistics (3PL)

Inventory & Logistics

Also known as: 3PL

Definition

Outsourcing logistics activities — warehousing, transport, fulfilment — to a specialist provider.

Explanation

A 3PL provides scale, expertise and flexibility without the buyer owning warehouses or fleets. It converts fixed logistics cost to variable and lets the business focus on core activities, managed via SLAs.

Example

The firm moves its distribution to a 3PL, paying per pallet stored and shipped instead of running its own depot.

Related terms

• Logistics — The management of the movement and storage of goods — transport, warehousing, handling and delivery.
• Outsourcing — Contracting an external supplier to perform a function or produce goods that could otherwise be done in-house.
• Order Fulfillment — The process of receiving, processing and delivering orders to the requester or customer.
• Warehouse Management — The control of storage operations — receiving, put-away, picking, packing and dispatch — to move goods efficiently and accurately.

Frequently Asked Questions

What is Third-Party Logistics (3PL)?

Outsourcing logistics activities — warehousing, transport, fulfilment — to a specialist provider. A 3PL provides scale, expertise and flexibility without the buyer owning warehouses or fleets. It converts fixed logistics cost to variable and lets the business focus on core activities, managed via SLAs.

Can you give an example of Third-Party Logistics (3PL)?

The firm moves its distribution to a 3PL, paying per pallet stored and shipped instead of running its own depot.

Back to the procurement glossary | Procurement concepts | Contact us