3PL Warehousing: General & Contract - What's the Difference? | MTE Logistix (2024)

FAQs

3PL Warehousing: General & Contract - What's the Difference? | MTE Logistix? ›

Broadly speaking, general warehousing offers the most flexibility and scalability, while contract warehousing provides more control and stable costs. Choosing which one is right for your company will depend on your unique needs.

However, there are some key differences between the two. 3PLs offer a broader range of services, including transportation, warehousing, and even some portion of the manufacturing process. Contract logistics providers tend to focus narrowly on transportation and warehousing services.

Contract warehousing is different than 3PL warehousing.

A 3PL service provider usually stores material on a per-month basis while also providing fulfillment and logistics operations for material. A contract warehouse differs from this, however, in that it is a long-term agreement.

What Is The Difference Between Contract Logistics And Warehousing? Therefore, contract logistics encompasses a far larger range of services than warehousing and distribution. Contract logistics is the process of outsourcing resource management tasks to a third-party enterprise.

A business often works with third-party logistics (3PL) companies to handle logistics operations. Like other business partnerships, you need documents to solidify the working relationship to protect both parties and resolve future disputes. That's where a 3PL agreement comes in.

Contract Logistics is defined as the comprehensive process from production to distribution at the final point of sale. This means that Contract Logistics is not simply the process of moving goods, but a far more comprehensive course of action that merges traditional logistics with supply chain management processes.

Self warehousing may offer you a place to store inventory, but also leaves coordinating product movement, managing packaging and shipping completely up to you. 3PL, meanwhile, takes these needs into account and specializes in a more seamless provision of services.

Contract warehousing can also apply to just part of a warehouse. For example, a company may commit to a contract warehousing arrangement for 50,000 square feet out of a 150,000-square-foot warehouse.

Large businesses with changing demand or abrupt customer orders may benefit from this. You can change your warehouse needs without using up space or signing long-term contracts. Scalability is crucial for high-demand enterprises like holiday merchants.

Contract warehousing offers many advantages, including flexible fee structures like fixed, costs-plus, or a combination of both. It also carries less risk for retailers and manufacturers because they aren't tied to the recurring costs of owning a warehouse.

What is the difference between logistics and 3PL? ›

As we've alluded to above, a 3PL will manage a much greater portion of your supply chain than a contract logistics provider. Activities undertaken by a 3PL can include: Inventory management (including receiving and quality assessing inventory on behalf of an eCommerce retailer).

For example, 3PL (third-party logistics service provider) is often used synonymously with contract logistics.