Managing key supply chain functions like warehousing, distribution, and transportation in-house can be difficult and expensive. This is especially true when logistics management isn’t your company’s core competency.
Unlike big boys that can afford to go direct to carriers, your small company might not have the financial power to follow suit.
Fortunately, you can outsource logistics functions to a 3PL company and focus on what your business specializes in. But you should know that not all 3PL companies are created the same. And, the lowest quote may not mean you’re getting the best deal.
Here’s what to look for when choosing the best 3PL provider from a list of options.
You do your best to take your company to the next level, but there will always be forces thwarting your efforts.
Demand for your products might increase or decrease due to one reason or another. When this happens, you need a 3PL provider that can efficiently scale their operations to accommodate your changing business needs.
Assume one of your biggest customers ends their contract with you because they’re closing down. You’ll want your 3PL provider to rapidly scale down the capacity of your supply chain to take care of the sudden slump in demand.
Conversely, you also need a logistics partner that can keep up with an unexpected surge in demand without slowing down.
Your best bet for ensuring scalability through the ups and downs of business operations is to look for a 3PL service whose clientele base comprises companies both smaller and bigger than yours.
A logistics provider that already balances the needs of different size companies can adapt quickly to fit business needs without losing their usual efficiency.
2. Areas of Focus
Not all 3PL providers are created the same. Some 3PL companies specialize in a certain area of logistics, while others offer logistics solutions across all operational areas.
Regardless of what area or areas they specialize in, a 3PL takes care of your supply chain needs so you can focus on other important aspects of your business.
So, what’s the best type of 3PL for small to mid-size client companies?
3PL companies that focus on specific logistics functions are the best choice for small businesses. These 3PLs help small business with the specific operational areas that they need help with.
Conversely, 3PLs that offer logistics solutions across all operational areas are best for large companies that can afford to splurge on outsourcing their entire range of logistics functions.
3. Financial Stability
A financially stable company is a reliable partner for your business. As a client of your chosen 3PL, you’ll be part of the company’s stakeholders.
Like other stakeholders, you’ll be interested in the success of the company. A 3PL that keeps growing despite the challenges it faces will give you peace of mind that your supply chain processes won’t be disrupted at the most crucial times.
An effective way to gauge the success of a 3PL is to check its financial performance over the years. A logistics provider that has a history of proven their financial stability is less likely to get acquired and can guarantee continuity of your logistics operations in the future. ATS Logistics has been helping SME’s since 1980!
4. Company Reputation
Going beyond the financial stability of a prospective logistics partner, also investigate their overall track record. Do they have a proven track record of meeting or exceeding client expectations? Do they have long-standing relationships with some clients?
The reputation that a potential logistics provider has built for themselves over the years will say a lot about their ability to provide reliable and efficient service.
5. Level of Experience
When looking for a 3PL to partner with, you should consider how much experience they have in the specific or different levels of support they offer. The more years of service they have in a particular area, the more competent they are at handling your business logistics needs.
Ask about similar projects they’ve handled in the past or are handling currently. If you like the work they do, you can partner with them. When you partner with an experienced logistics provider, you’ll enjoy peace of mind that your brand is in safe hands.
Many small businesses experience growing pains, so it’s important to delegate your logistics functions to a 3PL that has experienced them with another company in the past.
6. Improvement Culture
How does your potential logistics provider brace for the future? Look for a forward-looking logistics partner to ensure your logistics needs will be met now and in the future.
The business environment is constantly changing and so does the way logistics operations are performed. A 3PL that keeps expanding their facilities, investing in robust IT capabilities, and hiring skilled personnel to provide optimal logistics solutions can be a great business partner.
Ultimately, your choice of a 3PL provider will depend on how much you can afford. The cost of logistics service varies from company to company, so you should request for a quote from a few companies and compare the quotes.
When comparing quotes, don’t settle for the cheapest quote. The cheapest quote isn’t always the best one. In order to determine the best quote, consider what’s included in each quote and choose the one that offers the best value dollar for dollar.
Not All 3PL Companies Are Created the Same – Choose Wisely
Supply chain outsourcing is here to stay. For the vast majority of businesses struggling to keep up with their logistics needs, 3PL companies are a welcome relief. That said, selecting the right 3PL to handle part or all of your logistics functions is vital but can be overwhelming.
While considering the above factors when comparing 3PL companies will help narrow down your choice to the right logistics partner, there are many other things you may need to review before making a final choice.
Feel free to contact us today if you need help choosing the best logistics solutions for your company. We’ll gladly listen to your logistics needs and discuss the options we have for your business.