Third-party logistics (3PL) providers are the final link in a chain stretching back to raw materials suppliers. If any link in that supply chain breaks, customers feel it and feel it fast. A bad or good 3PL firm can make or break your company.
How do you choose the best 3PL firm for your needs? There are five steps you can take to find a great 3PL company that will wow your customers and make your business run smoothly.
Five Steps to Choose Great Third-Party Logistics
3PL providers typically provide outsourced distribution, warehouse, and fulfillment services. To choose the best one for your needs, follow these steps:
Step 1: Examine company needs
What is driving your company’s decision to seek a new 3PL provider? Are you dissatisfied with the current provider? Is the company growing so fast the current provider can’t keep up? Or are you looking to outsource this function rather than trying to build the infrastructure into your company?
To begin your search for a third-party logistics provider, start with the end goal in mind. If your goal is to find a more reliable partner, you’ll want to focus your search on firms known for their outstanding on-time delivery. If your company handles specialized materials or goods, you may need an industry-specific partner with the right equipment and skills to store and ship items safely.
Step 2: Look for 3PL with matching industry experience
Many third-party logistics providers acquire considerable knowledge and expertise in an industry or geographic area. There’s something to be said for starting a relationship with a 3PL partner who “gets” the unique needs of your manufacturing sector and has successfully handled many common challenges the industry faces.
Find potential 3PL partners who have deep and rich industry expertise. Look at who your competitors are using, if possible, and send out an RFP (request for proposal) to compare responses.
Step 3: Reliability is essential
A warehouse, distribution, and shipping partner must be, above all else, reliable. Knowing that you can depend on them to stock items carefully and correctly, ship orders promptly to your customers, and ensure goods are successfully moved is essential for a company’s sound bottom line (and peace of mind).
When reviewing RFP responses, check on the references provided. Ask each reference key questions about the company’s reliability. Did they ship on time? If not, how did they handle it? Why was something late? Make up a list of questions and ask each potential 3PL partner the same questions so you can easily compare the responses.
Step 4: All in one or multiple partners?
You have a choice of using an all-in-one 3PL partner or outsourcing to specialists. Perhaps you want to keep your warehouse but outsource the distribution center. Any combination is possible, but know that with more partners comes additional complexity. You may need new computer systems to ensure supply chain visibility throughout all partner companies if you choose to split the logistics function across multiple vendors.
Step 5: Review technology needs
That brings us to the last point—reviewing your technology needs. Do you have the systems to communicate with a single 3PL vendor or bridge across multiple vendors? Some companies may find it easier than others to connect their ERP systems with 3PL vendors. Others may find their systems are antiquated compared to the 3PL vendor. Ask about the technology the logistics partner is using and whether it connects seamlessly with your current ERP. If it does not connect, can it be bridged, and if so, by what means? Consider the proposed solution as part of the RFP process. It can potentially add time and costs to the job if customer programming is needed to connect with new logistics vendors.
Proceed With Confidence
With these five steps, you can move ahead with an RFP and choosing a new 3PL vendor with confidence. If you need help discussing technology needs with your logistics vendors or realize during the search process that it’s time to update your current technology, contact Emerald TC. We can help!
Emerald TC provides software and consulting for manufacturing companies. We can help you choose or find the right system for your needs, for every type and size manufacturing company. Contact us or call 678-456-6919 for more information.