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Making the right decision about your 3PL service provider does not have to be a difficult task, but it does require some thought and consideration. In the long run, your organization’s choice of third-party logistics provider will greatly impact its costs, customer service, and supply chain.
A third-party logistics service provider does more than just transport and store goods. Today’s manufacturers have high demands, so most third-party logistics providers have developed a range of services to meet their needs. No matter what industry or market you are serving or the location of your operations, here are ten main factors you should consider when selecting a 3PL.
Capabilities and Specialities
It’s essential to feel confident that your 3PL partner is capable of handling your changing requirements, whether it’s kitting, multi-channel fulfillment, reverse logistics, or subscription box services. Oftentimes, 3PLs are an excellent choice in one service area but could be incapable of providing the service you need in another location.
If you want to make real-time, data-driven decisions with confidence and ease, your 3PL provider should be able to connect with the e-commerce platform you select and deliver a business intelligence feature that allows you to do so.
Supply chain management is becoming more and more important for profitability and the success of your business, so when selecting a third-party logistics company, stability is a primary concern. The process of choosing a 3PL takes a lot of time and resources, so make sure that the one you select has a proven track record and the financial stability to remain in business even during economic downturns.
In the selection process, try to obtain a current customer list and potential contacts whom you can interview. It is important to select a 3PL service provider that has a history of using reliable methods, practices, and relationships.
In the larger logistics industry, a 3PL’s reputation matters more than anything else. Customer satisfaction isn’t the only factor that builds a good reputation, fulfilled carriers, employee satisfaction, and vendor relationships are equally vital.
In terms of logistics partnerships, you want them to be well-regarded, because when challenges arise – as they often will – reputable 3PLs will use their connections, team, and industry networks to solve problems.
Security and Safety
As an organization, 3PLs are judged by the way they conduct themselves regarding the safety of goods and materials they transport. Throughout the industry, there are near-constant changes to safety regulations.
Any 3PL that wishes to remain compliant must stay abreast of the latest developments and initiatives. You need a partner that takes security seriously in addition to the safety of assets and employees. It is not merely important but vital to protect data and financial information. Be sure the provider you choose has PCI, FDA, and DEA certifications, in addition to a HAZMAT Shipping Certificate.
Growth and Scalability
If you are choosing a 3PL, growth and scalability are very important. If you wish to work with a 3PL for a long time, you’ll need a partner that can grow alongside your company. There would be no point in picking a 3PL now for your current size, only to move to a new one in a year because your growth exceeded expectations, and they could no longer accommodate you.
There are different types of customization options for third-party logistics. Whether you are distributing via e-commerce, business-to-business, or retail channels, you need to work with a fulfillment partner who offers custom solutions that integrate seamlessly with your supply chain.
A fulfillment partner who can customize every customer experience down to the packing slip is what you need when it comes to packaging and shipping. Choosing the right 3PL will allow it to act as an invisible extension of your brand, providing your customers with the same attention to detail and service they have come to expect from you.
The accuracy of your inventories, shipments, and orders are determined by internal processes your third-party logistics provider has developed over time. A 3PL should prioritize customer satisfaction. If inventory, shipments, or orders are not accurate, customers will be disappointed, which will result in product returns.
Ask your 3PL partner about their Warehouse Management System and the accuracy rate before selecting them. You may want to look at other options if their accuracy rate falls below 99.9% or if they do not use the latest technology.
Responsiveness is not only about how the fulfillment process goes during normal operations, but also about how well things go when there is a problem. As you research and compare 3PLs, ask them the following questions:
- When there is a disruption in the supply chain, what are their strategies for handling it?
- How do they cope with changes in order volume, destinations, or stocks?
- What processes do they have for tracking products in place if a product is recalled?
You can learn a great deal about the kind of company you are dealing with by answering these questions and whether they are capable of handling your logistics.
The technology supporting logistics is at the core of its sophistication. You should choose a 3PL that specializes in enterprise-level technology that streamlines the entire fulfillment process from order to delivery. Integrating your order management system, having access to business intelligence that enables you to make quick and accurate decisions, or having a team of IT experts providing you with top-notch support are all reasons to select a 3PL that utilizes the best technology.
Relationships with 3PLs are built around service and attention to your customer account. 3PL service providers that focus on customer service know the importance of quality management and service excellence not only for manufacturers but also to brands and customers. To be effective, a 3PL must be quick in identifying problems and resolving them. You can calculate cost savings, track products, and analyze delivery times with ease using the right 3PL. Besides these ten factors, there are some other points you can keep in mind when choosing a 3PL service provider.
One is to look for a provider with omnichannel expertise. Distribution and fulfillment are likely to remain omnichannel for the foreseeable future. With omnichannel becoming more mainstream, having a 3PL that can handle all aspects of fulfillment — from e-commerce fulfillment to subscription box fulfillment to retail distribution — is increasingly important to your business success. If you choose a certain provider, make sure that they understand where omnichannel fits in and how to use it to provide your customers with the best experience.
Another important point is to find a 3PL service provider that commits to continuous improvement. To achieve the best results, service, and cost savings, a third-party logistics partner that is committed to excellence and continuous improvement will always evaluate, refine, and improve their processes, using established solutions and new data.
Choosing the right 3PL partner can seem challenging at times. The ten elements listed above will help a great deal in narrowing down the candidate pool significantly. When making a decision, do not focus on a single metric, like cost alone, since a cheaper option will always be available. Set ‘trust’ as the ultimate criteria when selecting a 3PL service provider and you are sure to find a reliable logistics partner.
Are you looking for a reliable & cost-effective 3PL partner that can streamline your supply chain? Contact Logos Logistics today for all 3PL services in one place!
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