Third-party logistics (3PL) providers can be an incredible resource for businesses, handling the complex nature of distribution with sophisticated and efficient systems. Where a small organization might struggle to respond to shipping demands or adapt to market volatility, a skilled 3PL provider can easily accommodate these factors, allowing the business to focus on other things like stimulating growth or reducing costs.
But not all providers are created equal. How do you know which is reliable and best fits your organization’s unique needs? Before you pick a 3PL provider, take some time to dive into the following tasks and understand your needs on a deeper level. These steps on how to choose a 3PL provider should help you find a capable partner for years to come.
1. Assess Your Business Needs
Start by finding your must-haves and collecting the information a good 3PL provider will need before offering its services. Map out the scope and scale of your operations and the level of service you need from this new partner. Will you need them to provide value-added services like kitting, fulfillment or pallet displays? Do you have products with unique demands, like hazardous materials or fragile items, that they can accommodate? Make sure your provider can meet these demands and has experience with them.
Consider what you want your customer experience to look like and how your 3PL provider can help you get there. You may want to personalize the customer experience with unique freebies or packing slips, or maybe you just want to ensure reliable, mistake-free deliveries. 3PL partners function as an extension of your brand, so make sure the company can meet the standards your customers expect.
Another aspect to consider is your organization’s plans for growth. If you intend to scale your business, your 3PL provider should be able to scale with you. Understand your requirements for capacity, speed, throughput and other relevant metrics that will help you grow and maintain quality.
2. Evaluate 3PL Providers
Once you know what you’re looking for, you can start assessing specific providers. Gather up a list of potential partners and do some digging. Look into their position on aspects like:
- Reputation: Learn about the provider from different sources, including customers, carriers, vendors and even employees. A good reputation signifies a good track record. It can also point toward a provider with strong industry connections. For instance, they may be able to solve problems more easily or negotiate better rates.
- Experience: A provider that’s been around for a while understands the details of distribution and logistics. They can provide reliable insight, and you can rest easy knowing they’ve been there before. Experience can also point to a provider that knows how to handle the ups and downs of an ever-evolving industry.
- Locations: You may want a 3PL provider with specific locations to better serve your customers. Consider where the company places its warehouses and whether they sit close to ports and highways.
- Technology and infrastructure: Today’s supply chain relies on sophisticated technology and systems. Ask your 3PL provider what kind of software they use and how they achieve efficiency and quality in their processes. Look for a partner that integrates with your chosen e-commerce platform and has a good support team in place.
- Pricing and contracts: Of course, your 3PL provider should fit within your budget. Analyze potential contracts and consider whether the prices they’re offering you are competitive without being suspiciously low.
- Safety, security and compliance: Warehouse work environments can be a hot spot for safety issues, so dig into your potential partner’s approach to safety, including their track record with regulatory compliance. Look for their information and product security credentials to ensure they can protect your assets. Some certifications to look for include those from the Payment Card Industry (PCI), the Food and Drug Administration (FDA), the Drug Enforcement Administration (DEA) and any industry-specific organizations.
3. Consider Industry Specialization
A partner with experience in your industry can address unique and specialized requirements. For example, pharmaceuticals may require extensive monitoring, tracking and cold storage, while food and beverage products need exceptional speed to reach customers before going bad. Talk to your potential partner about their prior work in your industry, and ask for specific examples of how they can meet your unique demands. Pay special attention to their handling of regulations and compliance.
4. Learn How They Communicate and Collaborate
Communication and collaboration are crucial in any partnership. As you read reviews and talk to the 3PL provider, look into their approach to communication and what tools they use for it. What is your 3PL partner’s method of responding to issues? Do they keep you in the loop through integrated software and real-time product insights?
Good communication often points toward better service since the company can quickly identify and resolve problems. They may even offer more support by providing insights into your products and costs. A strong 3PL partnership should help reduce the stress associated with logistics while giving you more freedom to grow your business.
5. Review Performance Metrics
Key performance indicators (KPIs) provide valuable insights into a provider’s performance over time and in specific areas. Figure out which KPIs are most important to your needs, and obtain them from your potential partner. Understand how they measure and report on these KPIs, and evaluate their performance history to learn more about their track record.
While every KPI indicates something different, watch for signs of stability and overall quality. Stability shows that the 3PL provider has adapted to changing industry demands. Aspects like accuracy, on-time deliveries and customer satisfaction naturally suggest a higher-quality operation that can support your goals.
6. Finalize the Partnership
Once you’ve found the right 3PL partner, you can finalize the partnership. You must negotiate your contracts and agreements and conduct due diligence for legal compliance and insurance coverage. These administrative tasks are essential, but you’ll also need to focus on establishing a good working relationship with the provider. Get to know your point of contact, and build a communication plan so you understand what to expect moving forward.
Establishing expectations upfront can save a lot of headaches down the road and set you up for a more successful partnership.
Find the Right 3PL Provider to Help You Grow
Regardless of your goals or industry, the right 3PL provider will significantly impact your organization. This partner can be the difference between on-time deliveries and costly shipment delays. They might help you reach more markets, gain more customers or reduce your expenses considerably. Take the time to make this decision properly and understand the characteristics of your operation, the provider and the partnership. By prioritizing your evaluation, you can decide on a partner that aligns best with your business plans.
If you need 3PL services in the eastern United States, Crown LSP Group offers family-owned support from North Carolina. Our convenient locations sit near several East Coast ports, major roadways and large cities, and we have experience in many different industries. We also have the flexibility and customization to accommodate unique requirements while keeping costs low. Request a quote today to learn more about our 3PL services and see how Crown LSP Group can help!
