Selecting the right third-party logistics service provider can be a challenging experience for companies. After the coronavirus pandemic dismantled many supply chains, business continuity planning, technology and automation, and supplier diversity became the top priorities for supply chains everywhere. After all, the reputation and success of your company depend on your logistics provider’s reliability, making a third-party logistics provider a crucial part of many brands’ supply chains. Avoid a potential logistics nightmare by using these ten essential elements in selecting your perfect third-party logistics service provider or 3PL.
Picking a Third-Party Logistics Service Provider
1. Logistics Capabilities
This one is crucial, as it encapsulates the role of a third-party logistics company: every third-party logistics service provider must be competent in the specific service areas that meet the client company’s needs. Just because a provider is a rock star in one area, it’s not a foregone conclusion that they can service your business properly.
Also, they should have a set of abilities that can satisfy both your short-term and future requirements. For instance, EDI-capability may not be a requirement for you today, but what if it does become required for you in 12-24 months? Do you want to unwind all the onboarding and integration work invested in a new relationship?
Dig a little deeper and ask:
- Are truckload lanes repetitive, originating from limited shipping points and terminating to a relatively limited number of consignees?
- Are shipments time-sensitive, or do they require drop trailers? A mid-sized, asset-based carrier would meet these needs without getting sidetracked by their exceedingly extensive list of clients.
- Are truckload lanes sporadic? Is there live loading/unloading, or do shipments come from many origins that terminate to an increased number of receivers? If so, a 3PL provider or broker might be a better fit.
- Do you require access to dedicated trucking assets and 3PL? A logistics provider with assets and a 3PL division may offer optimal solutions.
Does the logistics provider claim to possess all the capabilities “under the sun,” but your organization requires only a few core services? Be wary of a company that is a “jack of all trades” and master of none.
2. Focus on Customer Satisfaction
Does the logistics provider prioritize customer service, responsiveness, fluid lines of communication, and effective problem-solving? These elements can be challenging to ascertain early on but do your homework.
Virtually all companies claim to have excellent customer service, but how do you know? You ask their customers. Ask for references, preferably from companies in similar industries and needs. Good customer service is no accident. If the customer service is consistently excellent, it’s likely a result of a well-documented and repeated process that will continue over the years.
Another yield of good process execution is safety. It is uncommon for a logistics provider to achieve excellent results in customer service and poor outcomes in safety or vice versa. You can deduce that a safe logistics provider probably provides good customer service.
3. Commitment to Technology
When you’re selecting a third-party logistic service provider, consider technology that works for you and with you. The 3PL’s technology should simplify and streamline your processes, automating your most tiresome tasks. It’s essential to ask the 3PL these questions:
- How does their technology connect to your online store or existing software systems?
- How does their software use your data to its maximum advantage?
In addition to the third-party’s fulfillment services, their scalable technology should include a cloud-based warehouse management system and electronic data interchange (EDI) capabilities. Technology should help you with automation, processing orders, inventory management, tracking orders, and managing e-commerce returns. Find a 3PL committed to staying on the cutting edge of technology because the last you want to worry about when managing your business is whether the technology can support your growth.
4. Safety Record
Due to the ever-changing landscape of safety regulations, you must select a carrier with a strong safety record. A review of safety ratings and statistics is available to the public here. Also, see how we value safety.
Not all businesses are the same. While a 3PL might have a full range of logistics and fulfillment services, your business might not need access to all of them right now or ever. The right 3PL understands the importance of creating a custom plan specific to your business needs and vision. As you grow and your needs change, your 3PL partner will be there to help accommodate your business’s expansion.
6. Company Stability
Whether your supply chain is complex or straightforward, select a logistics provider with overall company stability. Top suppliers are consistent suppliers. You can jeopardize quality as companies experience rapid change. How long has the company been around? (Since 1958, we’ve been saving time and money for our customers with logistics services.)
Furthermore, if one high-liability event occurs and your provider cannot withstand the fallout, the liability often shifts, in effect, to you, the shipper. You can ease this concern if the provider’s “word,” name, and reputation have remained intact through decades of market turbulence and economic uncertainty.
7. Company Reputation
In a new business arrangement, you can rest assured that the relationship will be tested at some point. Often, the test will reveal the service provider’s leadership and character at this juncture.
Before it is too late, investigate whether the provider will respond with integrity and honor. Time will reveal whether the firm has a good, bad, or ugly reputation with customers, suppliers, and employees.
- How do they treat their suppliers and employees?
- Are they an active and positive force within their community?
- What type of reviews do they have online?
- What are the consistent themes that repeatedly appear in their marketing material?
- How long have they been in business?
The answers will go a long way to determining how the provider will be as a supplier and partner.
Bonus: Double-check all elements if a supplier’s price is significantly lower than the market.
- What good is a cheap price if a provider doesn’t deliver consistently or provide an adequate response in the event of a mishap?
- What good is a cheap price if service failures cause you to lose revenue?
- What good is a cheap price if your team spends countless hours resolving claims and problems?
Think about the total cost associated with selecting a long-term solution provider. The provider that offers you the overall lowest cost of working together is the partner you want around for years to come.
8. Inventory Management
A well-managed inventory can make a big difference to the success and growth of your company. A good 3PL offers an integrated warehouse management system (WMS). A sophisticated WMS can display real-time inventory for all your items, sync inventory with your online store, and reorder inventory to avoid items going out of stock. Quality load tracking and inventory tracking software can significantly impact your business’s efficiency through instant alerts and notifications about pickup and delivery. With the right 3PL partner, expect critical inventory operations to be streamlined and enjoy the ability to identify potential issues before they become a problem.
9. E-commerce Product Fulfillment
With all the competition in e-commerce, find a 3PL that backs up its e-commerce fulfillment services with reliability and proven results. You don’t have to be limited to what you’re doing today. Find a provider who will offer more than 70 pre-built integrations to different shopping carts, marketplaces, and ERP systems. Look for an affordable e-commerce fulfillment services provider who treats your customers like their own. Everyone wants their customers to stay happy.
Are you limiting your business’ potential by only operating out of one region? The right third-party logistics companies have access to many locations through an expansive network of fulfillment centers. The ability to tap into a network of fulfillment centers and distribution warehouses in major cities allows you to reduce the cost of shipping and significantly trim the transit time for orders. A 3PL can provide nationwide coverage and a range of logistics services to expand your business’s reach.
Choosing the Best 3PL Logistics Service Provider
As we discussed, finding the right logistics provider can be a daunting task. Having provided logistics services in the U.S. since 1958, we recommend using these five elements to narrow the field of applicants. If you can no longer handle storage, handling, or delivery of customer orders, let’s discuss how our logistics services can improve your business today.
Frequently Asked Questions About Third-Party Logistic Companies
- What is the role of a third party logistics company?
The role of a third-party logistics company is to provide distribution, storage, inventory, transport and fulfillment solutions to their client companies. In short, to provide opportunities for smaller companies to access an infrastructure that can compete in a larger market.
- What is load tracking?
Our customers are able to easily track their shipments in real time from our website.
- How can third party logistics impact my supply chain?
Third-party logistics companies can help you streamline your supply chain by offering a number of services and solutions designed to save time, money, and ‘wow’ your customers.
- Managing Inventory, Packing and Tracking
- Loading, Shipping and Storage of goods
- Communicating Warehouse Data, and Fulfillment Data
- What factors are considered while selecting a logistics provider?
If you can no longer handle storage, handling, or delivery of customer orders.
- What are the different types of logistics service providers?
- Inventory management.
- Warehousing solutions.
- Order fulfillment.
- International logistics.
- Freight shipping.
- Supply chain management.
- Transportation services.
- What are the 5 domains of logistics?
There are five elements of logistics:
- Storage, warehousing and handling.
- Packaging and palletization.
- Information and status systems.