Thinking of choosing a third-party logistics partner for your business? Here’s how to pick the right one for your business.
Third-party logistics no longer means simply moving and warehousing goods. Most 3PLs have developed a host of services to meet the demanding needs of today’s modern manufacturers. Whether they specialize in a specific vertical or they are logistics generalists, most fulfilment partners will tout their sophisticated operations, good carrier relationships, and industry expertise, so you’ll need to look at these traits as foundational, not as differentiators. Third-party logistics (3PL) partners handle outsourced inventory management, warehousing and order fulfilment for another company — usually an e-commerce business. 3PL partners are experts with the right tools and infrastructure to maximize fulfilment logistics, which affords the merchant time to focus on other aspects of their business.
Both 3PLs and 4PLs take care of record management, warehousing and shipping or fulfilling logistics. Still, they have their differences:
Third-party logistics partners only focus on the outsourced operations of order fulfilment and transportation. In essence, 3PLs act as the subcontractor to an enterprise or company that maintains managerial oversight, but outsources the inventory management and fulfilment logistics of the orders.
A fourth-party logistics (4PL) partner handles the oversight of the logistics process in addition to everything a 3PL does. Most often, companies that choose to use a 4PL want the partner to offer strategic insight on and handle the entirety of the supply chain. 3PLs tend to be more transactional-focused, whereas 4PLs plan to offer complete coordination of vendors in the supply chain at the best value.
Third-party logistics providers that spend in customer service experience excellent services and quality management extend both to the manufacturer and the brand and its customers. Being able to quickly identify issues and effortlessly resolve problems is the hallmark of an effective 3PL. The right 3PL will provide business solutions that allow you to calculate cost savings, track products, and identify delivery times with ease.
The right partner will make your scalability easier. If your operation is already operating at scale, your 3PL handle the volume of products, recalls, and customizations necessary to maintain your operations and reduce costs.
Customer satisfaction should be more important for your 3PL. Inventory accuracy, shipping accuracy, and order accuracy are all determined by the internal processes your 3PL has put in place over time. Customer satisfaction should be a high priority for your 3PL, and if inventory, shipments, or orders aren’t accurate, customers will be disappointed, and you’ll lose money on returns. When settling on a 3PL partner, ask them about their Warehouse Management System and their accuracy rates. If they’re not using the latest technology, or their accuracy rates are below 99.9%, you may want to look at other options.
How long a 3PL provider has been in business says a lot about its ability to provide high-quality logistics and supply chain management services to its partners. Logistics is a constantly changing industry, so a provider that’s been around a while has years of experience adapting to new market innovations and has likely led many of them. Look for a fulfilment provider who has staked out its place in the supply chain market and has a reputation for providing outstanding service.
How a 3PL approaches the safety of its operations and the goods and materials it transports speaks volumes about how it conducts itself as an organization. With safety regulations undergoing near-constant change within the industry, the right 3PL must stay up to date with the latest initiatives to remain in compliance. Beyond the protection of assets and the safety of personnel, you also want a fulfilment partner that takes security seriously, as well. Protecting data and safeguarding financial information is not merely important—it’s critical.
Logistics sophistication begins and ends with the technology supporting it. Every aspect of fulfilment depends on it, so the 3PL you choose should have enterprise-level technology that streamlines the process from order to delivery. Whether it’s integration with your order management system, business intelligence that allows you to make quick and accurate decisions, or an IT team dedicated to providing you with top quality support, make sure your 3PL uses the latest technology and has the best support team available to meet your needs.