This guest blog comes to us from David Madden of Exchanger Hub.
With rapid e-commerce growth and more packages on the road than ever before, more companies are outsourcing their shipping services to third-party logistics companies in order to save money, improve customer service and streamline their supply chains. The global 3PL market is expected to be worth $935.31B by 2020 and shows no signs of slowing down.
If your company is thinking of investing in 3PL, there are plenty of factors to keep in mind. This company will be responsible for delivering packages to your customers and, ultimately, will become the face of your business. Use these tips when searching for a 3PL provider, so you can find the right partner for your business.
1. When Should You Invest in 3PL?
Before you start searching for a 3PL provider, you need to make sure this investment is the right choice for your business. Many companies lack the assets necessary to deliver their own products to customers. Investing in 3PL simplifies the shipping process, helping these companies focus on improving their products and services.
Ultimately, investing in 3PL should save your company money and increase your bottom line. You should compare the cost of delivering these goods yourself with the cost of investing in 3PL. If you decide that investing in 3PL is the right choice for your business, your 3PL provider should have a track record of helping clients reach their business goals, usually by improving customer service and increasing the number of sales.
If you’re new to the world of shipping and supply chain management, you’ll probably be better off hiring a 3PL provider. Keep these considerations in mind when comparing different providers.
2. Is Your 3PL Financially Stable?
Your 3PL provider should have a solid business model that guarantees their long-term success. Nothing could be worse than having a 3PL fall apart on you, completely derailing your ability to deliver packages and meet your customers’ needs. It’s not uncommon for new clients to ask 3PL providers for a financial statement or a list of current and previous clients. You can use this information to make sure the company will be around for the foreseeable future.
You can also find out how the company tends to deal with its partners. Do they have trouble making payments to the 3PL provider or do they regularly dispute compensation? Look for providers with a strong financial portfolio and lasting partner relationships.
3. Does Your 3PL Have a Good Reputation?
Talk to some of the providers’ partners to find out if they can deliver on their promises. Does the company have a long history of fulfilling orders on time? If they occasionally run into trouble delivering packages, what was the reason for the delay? How does the company respond to delays, so they don’t happen again in the future? The company should keep their warehouse organized to make sure they can deliver goods on time.
They should also pack their shipping containers carefully, so they arrive at their destination in mint condition. Research the history of the company to make sure they can meet your needs.
4. Does Your 3PL Have a Central Location?
Choosing a 3PL provider with a central location or multiple distribution centers is key to a successful supply chain strategy. Learn about the kinds of assets the company uses to make deliveries, where your products will be stored as they make their way through the supply chain and how quickly they can reach their destination. Ideally, the company’s warehouses and distribution centers will be close to major highways, airports, ports and railways to speed up the fulfillment process.
5. Can Your 3PL Scale with Your Operations?
Hopefully, your company will grow in the future, so you need to find a 3PL provider that can scale with your business. If your company suddenly takes on a slew of new customers and orders, launches new products or wants to offer faster delivery options to compete against the likes of Amazon, will your 3PL provider be able to keep up? Talk with executives from the company to learn more about how quickly they’ll be able to scale with your operations. Use big data and predictive analysis to better anticipate your needs and share them with your 3PL provider.
6. Does Your 3PL Have the Latest Tracking and Supply Chain Equipment?
Think twice before investing in a 3PL provider that doesn’t use the latest supply chain technology, including automatic pickers and stockers, supply chain management software, GPS trackers and the IoT. These devices are designed to create more transparency and reliability in the supply chain, so you and your customers know exactly where your products are at all times.
If your 3PL provider doesn’t offer services such as real-time tracking or expedited shipping, you will likely have trouble meeting your customers’ needs, especially if your competitors and their 3PL providers offer these services.
7. How Will You Monitor Your 3PL?
You also need to figure out how you’re going to audit your 3PL provider. Set up an internal team that’s responsible for monitoring the company, including their ability to deliver packages on time. Ideally, you should have regular access to this data, so you can hold the company accountable if they regularly lose packages or run into unexpected delays.
You should also be able to track the success of your investment in 3PL, including the impact on sales. Over time, you should see a noticeable uptick in sales and customer service rates as your 3PL provider expands your company’s ability to service your customers.
You’ll also need to reach representatives from the company on a regular basis to make sure everything is going smoothly. You’re bound to have questions along the way, so reliable communication is essential to a successful partnership. In fact, 73 percent of shippers interact with their 3PL on a daily or hourly basis. Come up with a game plan for keeping in touch with your 3PL provider, so you can stay in the know every step of the way.
More companies are investing in 3PL than ever before. Compare different providers to make sure your company is investing in a reliable shipping partner that can help you accomplish your goals, so you can stay ahead in an increasingly competitive industry.