How to Choose the Right 3PL
Third party logistics providers enable you to step out of the warehouse and focus on what you do best – product design, sales, marketing, and customer service. Outsourcing your logistics eliminates the fixed costs associated with owning and operating a warehouse such as facilities, labor, equipment, utilities, and insurance. 3PLs can put you into a variable cost structure instead of a fixed cost structure. 3PLs may perform tasks that you may be paying for at no additional charge.
In order to find a 3PL that will compliment your business needs, it is important to understand your core requirements and processes. Do your research and compile a short list of 3PLs that hold themselves to a strict code of ethics with respect to their business practices and procedures. When evaluating potential 3PLs, it is important to have a sound understanding of their business history, service offerings, and their ability and willingness to act as an advocate for your business.
Ask potential 3PLs for customer references and work history. Contact their current customers and get an idea of their day-to-day and monthly interaction with their 3PL. Ask their customers if the 3PL is invested in their organization’s goals and initiatives. Does their 3PL develop and integrate solutions that improve their client’s overall performance on a consistent basis? It’s also important to find out about the 3PLs work history – you may want to only consider companies with several years of experience in serving your industry and those who are well respected within their own industry.
You can involve your 3PL in as much or as little of the shipping process as you would like. You can have them handle only certain lanes and product lines or use them as an extension of your supply chain. Many 3PLs can act as an outsourced shipping department and can store your product in their warehouse and ship it as soon as you get the purchase order. This is very beneficial during your slow sales cycles– you don’t have to pay the fixed costs associated with owning and operating a warehouse. The 3PL’s fixed costs are spread out over all of its customers.
If you import or export your products, you may want to partner with a 3PL that is also an international freight forwarder and Customs broker. In doing so, you can address all of your supply chain and international shipping needs with one point of contact. All you would need to do is release the purchase order to the 3PL and they would arrange the correct documentation, customs clearance, and door-to-door transportation of your merchandise. In using one supplier for your international freight, warehousing, and customs clearance needs, you can reduce your overall costs and time in transit, as well as increase your customer service and satisfaction.
Find out where the 3PL excels – do they perform better in certain modes of transportation or in certain trade lanes? You want to know that the 3PL will align with your transportation and warehousing needs. Before switching or starting with a new 3PL – let them service your usual lanes or a product line and see how they compare.
When choosing a 3PL, the cheapest provider may not be the best provider. It is important to consider the value of the solutions they provide. Make sure that your 3PL uses quality carriers – ones that carry verified insurance, have a respectable safety rating, and an established business history. As mentioned previously, it is important to choose a 3PL that will act as an extension of your business and are invested in your organization’s goals and initiatives. Ask the potential 3PLs if they will help you make an insurance claim in the event an accident or mistake happens. Quality 3PLs will act as a liaison between you and the carrier on your behalf.
When evaluating potential 3PLs, find out as much as you can about their service offerings, business history, and whether or not they are able and willing to act as an advocate for your business. Using a 3PL frees you to step out of the warehouse and focus on customer-facing priorities as well as lower your fixed costs that are associated with owning and operating a warehouse. Often, the 3PL can take on as much or as little of the shipping process as you’d like. Most importantly, choose a 3PL that will develop and implement intelligent solutions that make your organization more efficient and profitable.
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Gholston, Kyle. “6 Secrets to Finding the Right 3PL”.Inbound Logistics. 3PL Line. April 2013.05 June 2013.