March 2019 | How-To | Ten Tips

Optimizing a 3PL Partnership

Tags: Logistics, Technology , Supply Chain

Taking time to invest in a strong relationship with your third-party logistics (3PL) provider can have a remarkable return on investment for your business.

1. Start with the end game in mind. Consider how you will define the partnership's success. Enhancing your brand? Gaining better control of inventory? Offering fast or free delivery? Improving the customer experience? All of the above? Having a clear idea of your desired outcome can help you identify priorities and give clear direction to your provider.

2. Consider your customers' service-level expectations. Do your customers expect same- or next-day shipments, or would they be satisfied with two- or three-day service? Are products one-size-fits-all or is personalization required? Communicate these expectations to your 3PL so it can design a solution that meets them.

3. Set high standards. Your provider should pay careful attention to solution design and utilize proven processes to uphold service excellence. Confirm that it leverages methodologies such as Lean Six Sigma to ensure quality and accuracy. Expect your 3PL to spur continuous improvement by sharing innovative ideas to reduce costs, increase productivity, and improve service.

4. Identify necessary capabilities and resources. Develop an itemized list of requirements for achieving your desired outcome and confirm up front that your 3PL can accommodate them. The list may include strategically located facilities, a robust order management system, customization capabilities, call center support, or returns processing, among others.

5. Share information. A well-run supply chain depends on data. For example, sharing projected order volumes can help your 3PL secure sufficient space and staffing and prevent service issues. The 3PL can use detailed shipment history to conduct a transportation analysis and determine the most cost-effective network configuration.

6. Provide specifics up front. Let your provider know your exact requirements and parameters and establish a clear timeline. Whenever possible, make the 3PL aware of storage component needs, seasonal variations, promotional activity, and inbound/outbound delivery requirements to avoid surprises.

7. Anticipate growth. Your business is always changing and, ideally, growing. Confirm that your provider can scale space, staff, and technology to accommodate your needs—now and in the future. Typically, a shared space environment offers the most flexibility with the least commitment.

8. Be open to fresh ideas. An experienced provider might propose a solution you hadn't even considered—adding a distribution node, redesigning the flow of goods through the warehouse, moving product configuration or customization closer to the consumer. Don't be afraid to tap the 3PL's knowledge and best practices.

9. Approach the relationship collaboratively. Recognize your 3PL as a trusted partner who shares your business goals. It has a vested interest in your success and values your input and feedback.

10. Tap your 3PL's range of services. Warehousing, fulfillment, transportation, value-added services, technology—the more help you can obtain from one provider, the more seamless, scalable, and cost-effective your supply chain will be. Centralizing the logistics function helps to ensure that you provide consistent service and offers better predictability and reliable deliveries. If getting closer to your customer is a priority, consider leveraging your provider's facility network.

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