As an eCommerce owner or business owner, you may not know what to look for in a third-party logistics (3PL) partner.
This blog post will cover some of the key points and considerations that should be taken into account when choosing a 3PL partner for your company.
A good 3PL company can offer services such as warehousing, inventory management and logistics that are either too expensive to perform internally or simply outside the expertise of your team. The right partner can also help with customer relationship management (CRM) and marketing campaigns to help grow your business.
In order to choose the best possible 3PL provider for your company, there are certain factors you need to take into consideration including: cost, location, services offered, regulatory compliance requirements and more. We’ll go into detail on these points respectively, later on.
First, let’s come to terms with some 3PL basics.
What is a 3PL partner?
A third-party logistics company is a firm that manages the flow of inventory in a warehouse or transport facility, even if it’s not their own. The goal of a 3PL partner is to streamline operations and provide efficient storage to make deliveries as timely and efficient as possible. They also tend to be experts in dealing with different carriers for shipping purposes, which can come in useful when you’re trying to get competitive rates from multiple courier or shipping companies.
3PLs versus 4PLs
Third-party logistics providers are very similar in their services and responsibilities to what is called a ‘fourth party logistics’ (4PL) provider. In fact, these two terms are often used interchangeably even though technically they mean slightly different things. A 4PL provider will offer you additional services like financial and management advice whereas a 3PL partner is more focused on the day-to-day logistical operations of your business such as warehousing, inventory and transportation management.
Benefits of using a 3PL
Having an effective 3PL partner helping to manage your company’s logistics has many benefits including:
- Time saved: Less time spent managing daily operations
- Cost reduction: Lower costs for you and your customers
- Increased scalability and flexibility: A good eCommerce platform coupled with a knowledgeable third-party logistics service can save you time and money while also creating greater efficiencies in your supply chain.
How to choose a 3PL partner
There are many factors to consider when choosing the right 3PL partner for your business. Here are some of the key things you should look out for:
1. Location, Location, Location…
Location is one of the most important elements that should be taken into account when looking for a new logistics company to partner with. If you need to ship to multiple worldwide locations, find a partner who has a fulfilment centre in your desired locations and has close access to major shipping ports and borders where possible.his will dramatically reduce delivery time and costs. Also make sure they have an appropriate fulfilment warehouse size (or perhaps more than one) in order to meet demand at peak times such as Christmas or other high volume trading periods throughout the year.
2. Services offered & customer service
Make sure the 3PL provider offers a range of services to help you, not only with warehousing and shipping but also with tracking, packaging, inventory insights or other essential elements. This can also help reduce your workload as well as offering more flexibility within your business structure.
Find out what the logistics provider’s rates are for their services, including day-to-day storage charges, overtime charges or other types of fees that may affect the overall cost to you over time. Remember that high-quality service doesn’t always come cheap so be prepared to pay slightly higher prices for guaranteed efficiency in return.
4. Regulatory compliance requirements
All businesses must meet certain legal requirements when it comes to managing inventory and transport operations. These can vary depending on your industry and the size of your business.
Before signing any contract or agreement with a 3PL partner you should check they are fully compliant with all relevant legal requirements in order to avoid facing hefty fines. You may be penalised for their mistakes even if they are out of your control. Ask questions such as; How thoroughly have any issues been checked? Do they provide evidence of insurance to cover themselves against errors or accidents? How many years’ experience do they have within the industry? Have they got references from clients for you to contact if necessary?
5. Technology compatibility & availability
Make sure the company you choose has an excellent availability record so there aren’t any extended delays during busy periods throughout the year. This will avoid customer disappointment and potential financial repercussions for your business in terms of missing sales opportunities when items are in high demand. Also, check to see if their use of technology matches up and integrates seamlessly with your own. This will ensure ease of communication and optimum service provision.
Security is another important consideration when sourcing a new logistics provider for your business. Although this can be an important factor with many types of business partnerships, it’s especially relevant to companies who deal with high-value products and need to make sure they aren’t entering into any deals under false pretences. Find out whether the company keeps records of each product received, where it was shipped from and any other original information which will help you track anything that goes missing. Transparency is key and will ensure that operations are run much quicker and easier for everyone
It’s clear there are a number of factors to consider when finding the right 3PL partner for your business. Make sure your research and reasoning are thorough in order to find a company that matches up with all your values, requirements and expectations when it comes to securing the best possible service.
Less than ideal outcomes can cause disruptions to day-to-day operations and create expensive problems for you in the long run. So, it’s important to take all of the key points outlined above into account before making such an important decision.
Feel free to reach out with comments and feedback – what was your favourite piece of advice from this blog post? Is there anything else you think businesses should be aware of when looking for a 3PL? Let us know!