What to look for in a 3PL (Third-Party Logistics) provider

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So, you’ve decided it’s time to look for a 3PL (third-party logistics) provider to manage your logistics and help grow your business. What things should you look for as you research various outsourced logistics services to find the one that will best meet your needs? Here are a few tips on what to look for in a 3PL so you don’t get stuck with a 3PL that does more harm than good for your business.

Can the 3PL Keep Up with your Growth?

One of the best reasons to choose a 3PL is because they can help you grow more quickly than you might be able to without one. The 3PL should have scalability and flexibility to take on extra inventory as your business grows. This is especially important if you have a business that deals with a seasonal fluctuation in the number of goods you sell.

Are they Prepared for Disasters?

Many factors can affect shipping and transportation, such as technology outages, labor stoppages or shortages, severe weather delays, and more. Does the 3PL you are considering have plans in place about how to manage these (and more) disasters? The more prepared they are to handle disasters, the less those disasters should impact your business.

Do they Offer More than the Basics?

A 3PL should do more than just handle your logistics needs and help you reduce costs, they should also connect you to beneficial technology partners, help you network with other shippers in their community, provide insights about industry-leading practices and trends, help you collaborate with their partners, conduct market research, or do other things to help your business succeed. These types of services could bring additional value to your relationship with them.

How much Experience do they Have?

When it comes to working with a 3PL, you likely to don’t want to settle for the new guy on the block. Find out how much experience and expertise everybody has. Is the company investing in training their employees?

One of the reasons you may be looking at a 3PL is because you lack experience in logistics, so make sure the company you choose to work with has enough experience to compensate for your lack of experience.

Are they Financially Stable?

This should be something you discuss with any potential business partner, but you especially want a 3PL provider who can focus on helping you manage and expand your business rather than focusing on maintaining their own bottom line. After all, how would it affect you if their poor financial planning resulted in their business going under?

Ask to see profit and loss statements from the last few years. Make sure they have good relationships with lenders and banks. Find out if they’re in a good position to jump on innovations that could advance your business.

How Sophisticated is their Technology?

With all the innovations in technology, it’s crucial for a 3PL to constantly invest in new technology. Make sure they can handle your needs now and in the future and confirm that their systems are able to integrate with your own automation requirements.

Tips for Selecting the Best 3PL

Once you’ve selected a few top candidates, how do you choose the best 3PL to meet your needs? Here are a few tips.

  • Create a solid non-disclosure agreement before talking to anybody to protect yourself and your interests.
  • Put together an evaluation team made up of staff from the supply chain/logistics, information technology, sales/marketing, purchasing, and finance departments to ensure your entire company is on board with the final selection.
  • Insist on quarterly meetings with their senior executives. You want to do business with a company that is willing to communicate with you on a regular basis.
  • Define a timetable for handing off responsibilities. Document exactly how and when the 3PL will start taking over your logistics before you agree to sign a contract with them. Communication is key, and everybody should know their roles before the new system rolls out.

As you can see, there are many factors that you must consider before you can select the 3PL that best meets your needs. Your relationship with your 3PL will have a significant impact on your business as a whole, so it’s crucial to find one you can have an optimal relationship with. Hopefully, these tips will help you find a 3PL provider that can help take your business to the next level.

One thought on “What to look for in a 3PL (Third-Party Logistics) provider

  • May 2, 2019 at 2:02 AM

    A Third-party logistics in logistics and supply chain management is an organization’s use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services. Due to its services and various benefits, it is used most widely nowadays. This article mentions what to look for in a 3PL service provider.

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