A third party logistics provider (3PL) can help your business save money, increase efficiency, and provide great customer service on your behalf. Most 3PLs offer expertise in all areas of supply chain management and can handle everything so you can focus on running your business. When deciding to outsource some or all of your logistics to a 3PL partner, there are a myriad of factors to consider. Even if you know that you want to work with a 3PL, it can be hard to determine which one will suit your needs the best. Here’s a list of nine things to look for when determining how to choose a 3PL provider.
A third party logistics provider (3PL) can help your business save money, increase efficiency, and provide great customer service on your behalf.
1. Do your research and ask the right questions
As you probably know, there are a lot of 3PL companies out there and they all offer different services, expertise and specialties. A few components in particular you’ll want to look at are reliability, handling times, inventory management, carrier relationships, current clients, and industries and specializations. Make sure they can handle any special needs you have like fulfillment for Amazon or dedicated delivery service in certain areas.
2. Make sure your 3PL has robust technology solutions
Whether you have an off-the-shelf shopping cart system or a custom-built load tracking software, it’s important that your 3PL can integrate into your existing software systems. Depending on what your company specializes in, you should find a 3PL partner that offers technology solutions that make your life easier—whether it’s software for tracking shipments, solutions that make warehouse operations and inventory management more efficient, or anything in between. It’s also imperative to look for business intelligence solutions beyond the basics that will offer you data about orders or shipments and help you make informed and improved business decisions.
3. Look for scalability
Growth and scalability are very important considerations when you are choosing a 3PL. Ideally, you want to stay with a 3PL partner for a while, so you need to find a logistics service provider that can scale along with your growth curve. You wouldn’t want to pick a 3PL for your current size and then have to move to a new one in a year because you grew more than expected, and they can’t support you anymore.
4. Stability is important
The supply chain side of your business is increasingly vital to your profitability and success, so when searching for a third party logistics partner, stability is key. There is a lot of time and resources spent on choosing a 3PL, so it’s important to ensure that the one you select has a proven track record and the financial stability to survive in the event of an economic downturn. If possible, get a current customer list and potentially contacts that you can interview during your selection process. Make sure your third party logistics partner has a history of reliable methods, practices and relationships.
5. Look at a 3PL partner’s capabilities and specialties
Every industry has specific fulfillment and distribution needs and requirements, so double check that a 3PL company has extensive experience in your specific field. Most 3PLs handle a variety of industries, so ensure that your 3PL has the set of core competencies and abilities that can satisfy both your short term and future requirements so you can continue to grow and make supply chain improvements. Some 3PLs are really good at ecommerce, some are really good at retail, but make sure that your 3PL can do everything you need it to. It’s important that your 3PL can support your required product workflows. For example, can they speed up your product flow through the distribution center? Brand image is something else to look at when choosing a 3PL. Verify that your 3PL is committed to your brand image and that they can support it throughout changes in demand. If you are looking to expand your business internationally, make sure the 3PL has the capabilities to ship internationally. Finally, see if your 3PL can assist you with suggesting and implementing best practices across your organization to help with success.
6. Customer service
Any good third party logistics partner should prioritize customer service, responsiveness and communication. You should be able to get ahold of them when you need to, and they should offer you a variety of channels to do so. It’s also important that if they deal directly with any of your customers, they have the ability to match your required level of communication and professionalism.
7. Determine customization capabilities
The right 3PL can help you leverage technology, process improvement and industry experience to optimize your operations and ultimately improve your entire supply chain. A great 3PL partner can even offer custom software solutions and business intelligence data that can provide insight and direction to continuously improve your processes—basically, you want a long-term partner that will make your business better.
A great 3PL partner can even offer custom software solutions and business intelligence data that can provide insight and direction to continuously improve your processes…
8. Look for a provider with omnichannel expertise
Omnichannel distribution and fulfillment aren’t going anywhere anytime soon. As omnichannel has become more mainstream, it is increasingly vital to your success that you have a 3PL that can handle every aspect from ecommerce fulfillment to subscription box fulfillment to retail distribution and everything in between. Make sure you select a provider that understands the nuances of omnichannel and knows how to utilize it to deliver the best experience to your customers.
9. Find a 3PL partner that commits to continuous improvement
A third party logistics partner that is committed to excellence and continuous improvement will use proven solutions and new data to constantly review, refine and improve their processes—helping you achieve the best results, service and cost savings.
Advantages and disadvantages of using a 3PL partner
Third party logistics providers can take your business to the next level, but depending on your goals, they are not for everyone. Now that you understand how to choose a 3PL provider and what to look for when doing so, it’s also important to understand the advantages and disadvantages of 3PLs before deciding to make the move. Read on to learn about the pros and cons of using a 3PL.
Advantages of third party logistics providers
A 3PL partner can offer you a lot of advantages with industry expertise, scalability and knowledge of best practices to help you grow your business.
A huge advantage of using a 3PL partner is that they can help you scale up and down to meet demand and surges, meaning you don’t have to spend additional money on storage space, equipment and labor. You can use a 3PL’s flexibility, scalability and plethora of resources based on your current business needs.
A huge advantage of using a 3PL partner is that they can help you scale up and down to meet demand and surges, meaning you don’t have to spend additional money on storage space, equipment and labor.
2. Save time and money
One of the biggest benefits of using a 3PL is that it eliminates the need for you to invest in your own warehousing space, technology, transportation and employees for your supply chain process, which can all be very expensive. Third party logistics providers can also save you from making costly mistakes while ensuring you don’t need to worry about fulfilling the logistics yourself.
3. Continuous improvement capabilities
Not only can a 3PL make it much easier on you by handling the logistics, but they also have additional resources to make adjustments and improvements to each individual step in your supply chain and processes. Third party logistics companies offer expertise in this area and can help you maximize profits and help you provide the best service to your customers.
4. 3PLs offer industry expertise
A good 3PL provider will be knowledgeable of industry best practices and current trends in the manufacturing, supply chain and logistics space. They will be able to offer you suggestions and solutions that work well in your specific industry and help you avoid common and not so common mistakes.
5. Allows you to focus on your business
When you’re not worrying about all the different pieces of the critical logistics process, you will have a lot more time to focus on actually running your business. When you outsource logistics, you can enjoy the benefit of industry experience and expertise without exhausting your valuable internal resources.
Disadvantages of third party logistics providers
Using a 3PL is not for everyone, so it’s important that we discuss some of the cons of using one.
1. Loss of control
One of the biggest disadvantages of using a 3PL is that you are not engaged in the tactical details of your supply chain operations. You will lose the internal skills and infrastructure to perform these operations and it may be hard to come back to it in the future.
2. Limited direct insights into logistical operations
Handing your logistical operations to a 3PL means you are not performing the function, as discussed above, but it can also mean you have less visibility to the day-to-day details of your logistics process. Most 3PL providers offer data and insights into your operations on a regular basis and on request, but this is a big reason why it’s important to do your research and feel comfortable with your 3PL’s capabilities.
Most 3PL providers offer data and insights into your operations on a regular basis and on request, but this is a big reason why it’s important to do your research and feel comfortable with your 3PL’s capabilities.
3. Concerns about image
Outsourcing your fulfillment can feel like you are giving up your brand image and vision. This can happen if you pick a partner that cannot support your brand image, or you missed this as a qualifying factor when selecting your 3PL. To avoid this, make sure you determine your 3PL’s ability to commit to supporting your brand image during the selection process.
ITS Logistics can help you determine if working with a 3PL is right for you
At ITS Logistics, we know that determining how to choose a 3PL provider and then handing your logistics operations over to them can be an overwhelming process. Our team members have years of expertise in dedicated fleet services, all types of fulfillment services and distribution services, and carefully curated carrier relationships to offer you some of the best service in the industry—and we are ready to form a long term partnership with you. Give us a call to find out how we can help you today.