What to Look For in a 3PL
The field of third-party logistics (3PL) service providers has grown fiercely competitive, and the services and capabilities a 3PL can offer become difficult to differentiate.
Consider the following factors to identify a logistics provider that is part tactical service provider and part strategic business partner.
Does the logistics service provider's culture match my business' culture? Does the provider list its core values on its website? Hopefully. You want one that not only talks about their core values, but also proves that they can drive results by aligning these core values to successfully develop their own culture, which then drives value into client relationships.
Knowing that the 3PL you've contracted with has similar goals and values related to integrity, efficiency, leadership, and community consciousness is the first step toward a successful relationship. With labor costs accounting for around two-thirds of the total cost of a distribution operation, the people are the biggest opportunity for success. A provider who values human capital over infrastructure will be a stronger partner to align with to drive value into a supply chain.
Does the logistics service provider have a good track record in customer service, accountability, and financial health? Research all logistics service providers for testimonials and ask for applicable references. Pay particular attention to whether they are capable of providing business solutions that solve for current and future business needs. And look for any recent awards or recognitions that prove that they are going above and beyond in their industry.
Is the logistics service provider familiar with my business? Familiarity with the region in which your business operates is vital, particularly when handling your transportation. A 3PL should know what's going on at the ports, on the roads, and at the borders. Make sure that any provider you consider has the expertise for accurate forecasting and risk mitigation.
Familiarity with your industry may be the most important box to check in your search for a trusted warehousing and distribution partner. A high-volume, highly seasonal, and volatile retail environment has different needs and nuances than industrial parts manufacturing. Knowing how to be proactive and resourceful within these environments is a key characteristic of a 3PL that is a fit for your business.
Does the logistics service provider commit to technology? Having the platform is one thing—investing in the people to use it to drive value and scalability into a business's operation is another entirely. Not all businesses can allocate the capital needed to invest in top-of-the-line technology, nor can they invest in the expertise to use it—but those are now minimum requirements for a leading global logistics service provider.
Make sure your third-party logistics provider is equipped with the technology to forecast, plan, provide visibility, integrate, automate, and drive efficiency into your business.
Is the logistics service provider willing to invest in growing my business? A proactive 3PL will be interested in more than meeting your annual budgets, quotas, and KPIs. Today it's about aligning infrastructure—including systems, people, real estate, and other assets—to help scale your business. It's about engineering better methods to continually increase efficiency. It's about integrating technology up and down the supply chain to streamline processes and prepare for unforeseen disruption.
Knowing what to look for in a 3PL is important. Your business relies on the dependability of any third-party service provider with whom you contract.