Switch to ADA Accessible Theme
Close Menu
Washington DC Business Lawyer
~ Washington DC Business Law Attorneys ~

Can Third Party Logistics Services Help Your Small Business?


Entrepreneurship blogs will tell you that there are $10 per hour tasks, such as printing shipping labels and sticking them on boxes, $100 per hour tasks, such as making a promotional video for your new product, and $1,000 per hour tasks, such as negotiating a long-term deal with a new client.  They will encourage you to focus on the big tasks that will eventually yield big returns, even if you don’t get paid for them today.  Meanwhile, someone has to do the chump change tasks, especially in an eCommerce business.  If customers don’t receive their orders on time, you will not have a good reputation to market to other companies with which you wish to partner.  Eventually, your business outgrows the stage where you can manage it as a one-person operation.  Once you have hired several employees, you might still find all of your employees overwhelmed with work.  Eventually, you will have to outsource some tasks to other businesses and sign contracts with them so that you can scale your business.  For help strategizing about outsourcing and drafting contracts that will protect your rights in your relationships with other companies, contact a Washington DC small business lawyer.

What Is Third Party Logistics?

The phrase “third party” in the supply chain logistics does not mean the same thing it means in other contexts.  Rather, the supply chain logistics industry categorizes logistics into the following models:

  • First party logistics – Your company handles all its production, warehousing, and shipping in house. You knit tea cozies in your living room, store them and pack them in your garage, and drive them to the post office or FedEx store in response to customer orders by email.
  • Second party logistics – You rely on UPS or another courier service for shipping. It automatically provides shipping-related services such as tracking.
  • Third party logistics – You hire a logistics company to manage warehousing, order fulfillment, and shipping. The company might store your products in several warehouses in different states and decide which warehouse to ship the products from, based on the customer’s location.  Third party logistics (3PL) companies constantly analyze data to fulfill orders more efficiently.
  • Fourth party logistics – You outsource the decision making to a logistics company and sit back and wait for the paychecks (or financial losses). The company makes decisions about sourcing of materials and manufacture of products, as well as the processes that 3PL companies handle.

In other words, using 3PL means that you can focus on developing and manufacturing your products and leave the storage and delivery of products to a company that specializes in these processes.  Engaging with 3PL is an effective way to scale your business.

Contact Us About Scaling Your Business

Outsourcing can help you scale your business, but it is important to work with a lawyer when your company enters into an agreement with a larger company.  A Washington, D.C. small business attorney can help you make your small business go big.  Contact Tobin, O’Connor & Ewing for help.




Facebook Twitter LinkedIn