Partnering with a reputable 3PL provider to enhance logistics capabilities can bring tremendous advantages over doing it all in-house. At the same time, outsourcing critical logistics components comes with an element of risk, especially if you choose a provider that isn’t the best fit.
While today’s 3PL providers offer a much higher level of supply chain efficiency for companies lacking those resources or expertise, challenges and risks are still possible. In fact, implementing the wrong type of provider or solution can actually lead to more inefficiencies and have a severe impact the quality of service.
Here are 5 important factors to consider when selecting a 3PL provider:
What warehousing and fulfillment services are offered?
Evaluate the specific criteria your company requires. For example, do you have refrigerated or perishable goods that need to be stored in specialized facilities? What about delicate or fragile items? Do your orders require any specialized workflows or packaging? How much inventory space will you need?
Assess the warehousing network and delivery speed
Determine the expanse of a provider’s coverage to ensure each region or location in which your customers are located can be effectively serviced. You want to avoid expensive “long-zone” shipments that can take 4-5 days to be delivered. Some networks may only include 2-3 warehouses and cover a small area, while others may consist of thousands of warehouses and offer a nationwide or even international presence.
What are the costs of each service?
Virtually every logistics provider today operates with an internal “rate card” that classifies and categorizes fees associated with each step in the warehousing and fulfillment process. One example is a subscription-based fee associated with certain technology and customer support teams. These costs will vary depending stock and order volume.
What type of customer support is offered?
You are entrusting a third party to manage your inventory and own the process of packing and delivering orders to customers. As such, the level of customer service is incredibly important. Look closely at their warehouses to get a good impression of existing management processes.
Does the logistics provider prioritize customer service, responsive action, fluid lines of communication and effective problem solving? These details can be difficult to recognize early but it’s very important to do your homework.
Assess the provider’s technology solutions
A technology component is often associated with a 3PL service and typically provided in some form of an online warehouse management solution (WMS). This service should provide merchants with options to seamlessly inbound more inventory as stock is depleted and upload customer orders from all order management systems.
A prospective logistics provider must be competent in the specific service areas that meet your company’s needs. Remember that a provider might be superlative in one area but that doesn’t automatically mean they can fully service your firm. The provider should also have a set of proven abilities that can satisfy your short-term and future requirements.