Managing a supply chain is a full-time job. Without consistent oversight, your supply chain process could easily end up with excessive levels of inventory, delays in shipping or transportation, and all sorts of inefficiencies. In today’s convenience-obsessed economy, companies cannot afford to let supply chain issues go unnoticed or unresolved.
That’s why I believe an increasing number of business leaders are choosing to outsource logistics to a third-party logistics provider (3PL). 3PLs offer an array of essential supply chain management services, such as warehousing, transportation, order fulfillment, and inventory management. Think about it: did you decide to start your business so you could spend your days chasing down deliveries, both incoming and outgoing? Outsourcing logistics enables you to focus on the tasks you truly enjoy, like building a distinctive brand identity, growing your operation, and better understanding your customers’ needs.
Now that outsourcing logistics has become more commonplace, more 3PLs are popping up left and right. This can make it difficult to find the right partner for your business.
Track record and reputation
One of the most important factors to consider when choosing a 3PL is your potential partner’s reputation. This isn’t one of those situations when there are advantages to partnering with a younger business with fewer customers. When it comes to a responsibility as crucial as logistics, it’s imperative to choose a 3PL that has a strong track record and can produce good references from numerous satisfied customers.
You also want to find a 3PL who has experience working with companies in your industry. Every industry has its own challenges and regulations, and a 3PL that has worked with other companies like yours will be familiar with these challenges and regulations and know exactly how to navigate them.
To that end, a 3PL with more experience is also more likely to have a larger network of partners. In the likely event of a supply chain disruption, a 3PL with more partners to count on can keep your supply chain running until the issue is resolved. In fact, you can get an even better idea of a 3PL’s reputation by reviewing references from vendors, carriers, and employees, not just customers.
Customization and flexibility
Again, every industry has its own specific characteristics, and you want to partner with a 3PL that understands what makes your industry distinct. And due to the notorious complexity of supply chains, it’s important that 3PLs consistently adapt their services to meet the needs of each individual customer. A good 3PL will possess the resources to accommodate specific challenges of your business, such as unforeseen spikes in demand, or the need to maintain a certain level of inventory for a certain item throughout the year.
With this in mind, it’s also important to consider how your needs will change as seasons progress. Will there be times when you require additional services that you don’t need at this particular moment? Will the extent of your needs for each service change significantly? For example, at certain times of year, you may eventually require more storage space, or you may need to ship your items to further geographical distances. Your new logistics partner must be able to quickly scale up and meet these needs at any given time.
Finances and technology
Lots of 3PLs might say they are well-positioned for the future. Only some, however, will be able to prove it. When speaking with potential partners, be sure to determine whether the 3PL is in good financial shape and has made the necessary investments to succeed in the logistics industry of 2023. For example, if the 3PL has been able to consistently add new customers, has it simultaneously been making key investments in infrastructure and staff?
Another way to tell if a 3PL is ready for the future is the prevalence of advanced technology in its services. Does the 3PL consistently harness the latest transportation management systems, warehouse management systems, and freight forwarding software to improve efficiency and profitability for its customers? To what extent has the 3PL automated its fulfillment processes? A good 3PL should be able to rattle off all sorts of different ways it has stayed up to date with the latest developments in this ever-changing industry.
Customer service protocols
A reputable 3PL will have many customers, but that shouldn’t stop them from giving the same amount of attention to every single one. This is only possible if each customer has a designated point of contact who is fully prepared to field questions or concerns at any given time.
As you’re well-aware, supply chains tend to become disrupted at the most inconvenient moments, and every minute that goes by could cause more orders to be delayed. For this reason, your new partner should have someone who will always be available to respond to communications and work with you to resolve sudden issues.
As you’re speaking with potential partners, ask them how they typically handle supply chain disruptions, and how you would contact them for support. A 3PL that understands the importance of customer service will have protocols in place for resolving different types of issues such as delivery errors or product recalls. It’s the 3PL’s job to help you maximize efficiency and profitability, so the last thing they should do is put you in a situation where you’re wasting time and money.
Final thoughts
Choosing the right 3PL comes down to determining whether a potential partner possesses the resources to simplify your business’s logistics-related challenges while also meeting the changing standards of the logistics industry. Once those boxes are checked, it’s just about getting the impression that the 3PL is ready to treat this new partnership as a top priority and can truly help you succeed.
