Inventory management is not a new concept. It has been there for ages. Ancient Greek and Egyptian societies have provided details of record keeping. Before the industrial age, people used to track the inventory by manual counting. During the industrial era, Herman Hollerith made a breakthrough in bookkeeping. He invented the first modern automatic computation machine. Hollerith was the person who founded IBM. With the increase in the number of companies, inventory management started being outsourced. A new industry called the 3PL sector was born.
3PL stands for Third Party Logistics. During the 70s or 80s, many companies started outsourcing their logistical activities to 3rd parties. The Motor Carrier Act of 1980 was responsible for the increase in trucking activities in the US. This act helped warehousing companies to expand their work into the supply chain and logistics industry. The rise in information technology also gave a boost to this nascent industry.
Entering the 21st century, the use of the internet was massively increasing. The third-party logistics companies used the power of the internet to create various software that streamlined the process of logistics and inventory management. 3PL companies today manage all the supply chain activities on their own. They have their planning department. This department helps the clients(businesses) relax on planning how to set up the logistics.
3pl companies in san diego are working towards a hassle-free logistical support system, and they are proving to be effective in what they do. Additionally, they manage inventory, supply chain, and logistics independently. This industry has shown promising outcomes and is bound to grow in the coming years as more and more businesses come into the picture—a place where the 3PL sector has thrived a lot in San Diego, USA.
What are 3PL Companies?
In simple words, 3PL companies are independent companies that provide logistical support to businesses that outsource their logistical and supply chain activities. These companies do not own the products but deliver the products according to the safety guidelines. Many companies struggle in inventory management, bookkeeping, and transportation operations. 3PL companies provide solutions to all these hassles. They also help in warehousing facilities.
San Diego – A Booming Demand Center
San Diego is the eighth-most populous city in the country. In 2014, Forbes called it the ‘best city to launch small businesses and startup companies. New healthcare and biotechnology development centers are also on the rise.
Several IT and manufacturing companies require regular logistical support and supply chain facilities to distribute their products. Biotech and pharmaceutical companies also need logistical support. The rise of healthcare and biotechnology companies has facilitated the growth of third-party logistics companies.
The Different Types Of 3PL Companies
With the advancement in technology, 3PL companies have diversified into several types. These companies include freight forwarders, courier facilities, and other logistical and transportation services. Here is a sneak-peek into the different categories of 3PL companies:
- The Standard ones: These companies perform all the usual activities such as pick and drop, distribution, and warehousing. When one considers logistics, these three things are essential functions.
- The Service Developer ones: These companies help with customer-focused value-added services such as tracking, specific packaging, and unique security and systems. These companies require best-in-class IT individuals.
- The Customer Developer: These companies have fewer customers, but they provide a vast range of services. Their business models are customer-centric. They take up all the logistical hurdles on their shoulders and give solutions to them.
A Detailed Discussion
Here is a detailed discussion on the types of 3Pl companies-
- Transportation Management: Transportation can be a big hassle if not done right. Manufacturers need a Transport Management System (TMS) to manage the cost of logistics. 3PL companies help the manufacturing companies in solving this puzzle. They provide a reliable, cost-effective, and efficient transport system. They also help in managing the cost of logistics. Manufacturers can enjoy peace of mind once they hand over the products to the 3PL companies. Nowadays, anyone can track shipments anywhere, so there is no chance of misconduct.
- Warehouse: A common notion among the masses is that 3PL companies only help with logistical problems. But these companies have now expanded into the warehousing model where they even manage the inventory for their clients. 3PL companies allow e-commerce stores to store their products in the company’s warehouse. The company will send orders out from the warehouse and take care of the logistics. The only thing the e-commerce owner has to do is notify the company about the order.
- Information-based party: Information is the key to any industry in data and analytics. Advancement in technology requires using information for good purposes. Collecting information from the customer and providing information to them is what makes up a healthy company. Information provided by 3PL companies includes tracking features and advanced security features. Tracking goods is done using GPS and IoT (Internet of Things). Companies are also implementing artificial intelligence (AI) and Machine Learning (ML) to translate information into work smoothly.
Which One to Pick?
As of 2022, there are 14302 3PL companies in the USA, while California alone has 2939 operating inside the state. California’s second-most populous city is San Diego. The number of 3PL companies in San Diego is unknown, but the number is pretty high. With such competition among the companies, businesses need to choose the correct logistical partner. Businesses should properly research the companies they have shortlisted.
One should take a look at the range of services that they provide. The technology should be robust and flawless. Warehousing services would be a plus point. The company that the business chooses should commit to constant evolution. The logistics company should have a vast network of locations. If these pointers are check-marked, only then should they build a connection with the logistical company and move ahead with their plan.
The third-party logistics (3PL) market is growing tremendously. In 2019, this industry was valued at around $1028 billion, which experts forecast to reach as high as $1800 billion by 2027. This data shows that the industry would grow at a CAGR of 7%. The development of the e-commerce industry is a significant factor in the growth of the 3PL sectors. An increase in Globalization will increase the trading of goods. The more the trading, the more the requirement for logistical support. Again, the more they need logistics and supply-chain help, the more is the provision of the 3PL companies.