3PL Contract Logistics Operations

While Freight Forwarding is an important function of 3PL Service providers to facilitate the Supply Chain, another equally important function managed by 3PL Logistics Companies is Contract Logistics.

Under the broad umbrella of Contract Logistics, 3PL providers provide services of setting up consolidation centers, distribution centers, warehouses and inventory management services.

European network of transportation and warehouses stand apart from the rest of the world and are highly evolved regarding supply chain capabilities. America too has similar capabilities developed in recent years. Normally warehousing facilities are built and rented out as real estates. Warehousing Parks or Distribution Facilities are designed with complete layout and infrastructure for truck parking, yard management, and security systems, etc. Warehousing buildings of sizes ranging from 1000 sq. mtrs to several hundred sq. mtrs come equipped with all weather docks, dock levelers, and dock platforms to facilitate continuous loading and unloading activities and quick turnaround of vehicles. These facilities include office facilities and other utilities too as a complete stand-alone facility.

3PL companies rent out such facilities or in some cases invest in building their facilities in strategic locations in the transportation network or near major markets or in some cases in specific locations close to customer facilities.

3PL Warehousing is used for managing inventories of both raw materials and finished goods including spare parts, consumables, and promotional materials as the case may be.

Depending upon the need and size of operations, a 3PL may set up completely dedicated facility for a client specific requirement or provide dedicated storage space and services in shared facility or provide pallet wise storage on rental basis. All these modes are used depending upon the particular need of the logistics plan.

Normally the warehouses consist of vertical racks with levels anywhere from five levels up to ten and above with a carrying capacity of one ton per pallet position. Depending upon the storage need, racking design will vary from pallet racking to block stack, deck racking, shelving, bins, etc. Material Handling equipment used include Hand Pallet Jacks, Trolleys, Battery Operated Fork Lifts and various types of Reach Trucks used in racks.

The entire warehousing operations include Receiving Process involving unloading, de-skidding, inspection, in warding and put away. Delivery or shipment includes receipt of shipping order from the customer along with invoice or sales documentation, picking materials, consolidation, packing, marking, preparing outbound documentation and shipping out by loading into containers. Besides these functions, the other main functions in the warehouse include inventory management that involves location management, managing storage capacities and bulk and loose inventory, carrying out inventory counts to ensure accuracy of inventory and stock takes.

The entire warehousing operations are dependent upon documentation and systems that manage operations and inventory. Warehouses use WMS - Warehouse Management System as the backbone. The system manages inbound transactions, location management and generates and controls warehousing operations for both inbound and outbound transactions coupled with maintaining inventory in detailed level and managing inventories.

For any principle employer, the support of a good 3PL is necessary because its entire inventory amounting to a huge amount regarding value is in the custody of a third party. Inventory management operations are core to any operations. Hence it is necessary for every SCM Expert to understand nuances of 3PL Contract Logistics operations before taking decisions to outsource these functions.


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