Armstrong & Associates, Inc. estimates that as much as 86% of domestic Fortune 500 companies enlist the services of a 3PL provider. So should you do the same because the seemingly successful companies are doing it?
Far from it.
There is more to outsourcing your logistics than a me-too kind of thing. The services offer opportunities to reduce costs, bring efficiency to the whole process, and, most importantly, ensure the customer needs are well-taken care of.
But that’s only possible if you choose the right 3PL company. And “right” here isn’t universal. It depends on a range of details unique to your business. Your products, plans for the future – name it.
That said, there are a few pointers you can use to land a provider who fits your needs. Find out about 10 of them below.
1. Consider Stability
That is in terms of finances. Good financial standing is important since the operations of your business will depend on those of another.
Imagine when your choice of a 3PL logistics provider suddenly goes under. That will imply you also stop your operations for a while as you shop for an alternative. Though momentary, the loss of business here will be apparent.
Have a long-term outlook when shopping for a logistics provider because you don’t intend to stagnant at your position forever. You’re probably going to expand – into new markets, a larger market during the high seasons, etc.
And that means your logistics needs are going to change.
What you want is a service capable of tweaking their processes to serve your increased needs better without adversely affecting the general output. You don’t want to be traveling down the same road now and then because you choose 3PL providers that are rigid for a larger part.
3. Tech Capabilities
Your provider shouldn’t be stuck in the 1980s technology (or largely obsolete systems) when 3PLs were just starting.
Robust tech will make the whole process seamless, not just between the two of you but also in better handling customers. Even if you’re not at a level where you need the tech, you might some time down the line when your operations have advanced.
4. Customer Service
Most of the time, a 3PL wouldn’t be different from your business – at least from your customers’ perspective. The provider is more like a representative of your business.
So picking one with utmost focus on addressing customer issues can benefit you tremendously in the long run. Customers will attribute this to you, ultimately leading to repeat business.
5. What Are Others Saying About the 3PL Provider
Every company touts itself as being the best (even when they aren’t). A look at their past or present clients is what brings out the difference.
You’ll do good to look around and see what you can deduce as far as the potential 3PL provider is concerned.
What do previous customers say about their flexibility? How reliable are they? Are you assured of security?
These are some of the pointers you can use to gauge if a company is worth it.
6. Define Your Needs
Going in for a contract without first understanding what you need is not the best of ideas. You’ll be surprised to know that a lot of people go into this unprepared. Don’t be one of them.
Have a clearly defined set of expectations. What do you need? When do you hope to see the results? And, in what order will that be?
You’ll steer clear of the pack of business owners who have awful experiences with 3PL services.
The focus is more on transparency than the price point. It’s only natural that you consider 3PL providers who disclose any relevant information about their prices upfront – transparent in simple terms.
You may be tempted to go with the lowest but don’t. As pointed out, you shouldn’t consider the price as a standalone. You’ll be missing the bigger picture. Cheapest is not always the best.
You have to look at all the service features attached to that price before making a choice. Will your needs be adequately taken care of?
A heads up – a provider with prices below the market floor may point to a less than stellar service.
8. Consider Multiple Providers at First
You won’t pick a single 3PL and call it a day. Likely, they won’t meet what you’re looking for. Don’t look at more than three providers because with the sheer number of services offered, it’s easy to get overwhelmed.
Remember, the majority of 3PLs will be pulling from the same carrier pool so having too many in your network can create a negative impact on your freight rates and capacity.
9. Geographical Locations
It helps to pick a service with varied locations. Of course, you won’t need all of them.
But with that kind of flexibility, you won’t have to settle for the available point even when it puts you at a disadvantage. Besides, the provider can offer expert guidance on the best locations to go with.
10. Cultural Fit
This is the most important to an extent. Remember you’re handing over a part of your business to a different entity. So you have to ensure your 3pl services provider subscribes to the same (or close) culture as you.
This makes it easier for the provider to align with your needs and serve you better by tapping into their industry know-how. And collaboration is much more seamless since there will be that element of trust between the two of you.
To get a peek into a company’s culture, you’ll want to look at:
- Their future projections – in 5, 10 or more years.
- The company’s beliefs.
- The values they hold so dearly.
- The drive behind their operations (other than money of course)
- The state of their workplace – are employee matters addressed extensively?
- What about customer issues?
A 3PL provider can do a lot for your business. It’s no surprise that a good deal of companies uses this type of service.
But you have to be careful in choosing yours. Not every single one of them will align with your needs. Use the list above to guide you.
If you want to work with a reliable 3pl provider, get in touch and let’s help you.