Outsourcing a third-party logistics partner (3PL) is a standard practice for businesses as they expand beyond their own means. Instead of investing in uncertain or unnecessary extra infrastructure, or reorganising to accommodate for new roles in-house, you can expand logistics operations to a company which specialises in one sector of the larger supply chain management process. These third-party logistics providers (or 3PLs) take on the work from one logistics company, from shipping to inventory management and act as the medium between the warehouse and the supplier.
Hiring one of these companies can be a great boost to internal efficiency as they pick up the slacking work that keeps your business from moving. However, they can also be a hindrance. Passing off your work to an outside party is always a risk if they don’t know what to expect.
There are different kinds of warehousing, different products and processes for different industries. Picking one that has good rates isn’t enough, they need the right skill and experience.
uTenant identify what you should look for in a potential partnership with a 3PL to upgrade your business and keep it on an improving track:
One thing you need to remember is that 3PLs are their own companies, and you are a customer. As a client of theirs, you will be expected to follow just as many rules, but ultimately, it’s your money that is purchasing their services. Mind how they treat you, their business acumen, and their manners with you as a customer. 3PLs may take on multiple logistics companies at a time and treat them like stock in a warehouse. What you want is a 3PL that can take time out to address your concerns and inquiries, like a partner more than a subscription service.
Logistics management and fulfillment are complicated processes that require a lot more than file cabinets and fast hands. Make sure the 3PL is using the best software to handle your job. It doesn’t need to be the newest, in fact, the newer programs may not mesh well with the software you’re used to using. You want to be compatible, on the same level or able to interact with each other easily. No mixing up file types or connecting through multiple servers just to send an email. Stay comfortable with your equipment and let theirs match up.
This may sound obvious, but are they operating within legal limits? Anyone can form a 3PL and make a nice-looking website to entice your company to pay for services they can’t necessarily provide. Logistics requires skills, and those skills must be accounted for. Ensure that there is some documentation, certificates, or standardised qualifications they can show you on request to prove that they are capable of handling your high stakes demands.
Compare 3PL Networks
It would help if your prospective 3PL works with the same distribution or shipping companies that you use. That way you won’t have to make huge changes yourself. If you add a link in your part of the supply chain, it better be compatible with all the links above it. If not, there could be a break. Some 3PL companies may have a lot of work coming in and out of Asia, while some just don’t tap into the area at all and can’t work with far east distributors. Make sure your shipping networks line up with what you’re used to.
If you’re considering hiring a 3PL company and becoming part of a more complicated corporate entity chain you must have a reason, and it’s got to be a specific one. 3PL companies are designed to fill several gaps in the management of logistics operations, and there are plenty of gaps that can form. Ask what services a new 3PL not only offers but specialises in and insist that the matters most important to you are the ones they handle with highest priority.
Ask Plenty of Questions
If a salesman tries to get you to buy something without asking any questions, it’s a warning sign. If a 3PL doesn’t want you knowing everything they do, it’s the same kind of warning. Be as open and honest with them as you want them to be and ask them whatever questions they can legally answer. If they’re worth working with they should be willing to answer as many as they can and make time to do so. It’s part of the quality customer service for them to leave you confident that you know everything they know by the end of a good meeting.
Don’t Waste Time
3PLs are busy handling many clients that you may wish to join. And you’re busy trying to find the perfect outside company that will fit into the superstructure of your current business. Once you find a company that meets all your criteria and has an opening to accept a new client, you should make a move on them and start negotiating a reasonable start date so you can give them all the information they need to start their services and help your business.
3PL Cost Breakdown
Don’t be afraid to ask about the price itself and what it entails. Some 3PL companies offer a bevy of services and extra gratuities to clients that they may not need. If you just need them to handle one thing and handle it well, you don’t need to pay for the rest. Get a breakdown on all their pricing options or contracts and see what works best for you. Stick with the essentials and, if it’s in your budget, you can spring for some of the more enticing extra services like insurance or cloud data sharing.
The last step in working with a 3PL is the act of work itself. Having an outsourced part of the office takes some adjustment. Adjust to the new flow of work, or lack of work - and the replacement work that comes with managing an outside entity - and you will be upgraded into part of the highly efficient three-party structure.
Need some help?
Sourcing the right 3PL is a big task, and it’s hard to filter through potential partners that suit your unique business needs.
At uTenant, we have an online platform that makes sourcing your 3PL partner easy for you. Simply enter your requirements and we will find the right match for you.
It’s free to use, completely confidential and transparent.
Check out our step-by-step guide on how the platform works here.
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