4 Questions to Ask When Selecting A 3PL

As a whole, third party logistics companies have not progressed as rapidly as they should have in terms of transparency, technology, flexibility and communications protocols.  There are several speculations as to why this happens, but realistically, third party logistics providers can neither afford nor justify the necessity to take the risks required to stay ahead of the curve with newer technologies and policies.  Luckily, there are a few things you can watch out for when selecting a 3PL for your company.

How long has the 3PL been in business?

Believe it or not, although this seems obvious, this question is actually not to verify reputation or stability.  There is an obvious correlation between the longevity of a 3PL provider’s time in business and their ability to maintain up-to-date policies and procedures.  If a provider has been in business long enough to have evolved through several decades of changes, you then need to determine where they currently stand in terms of technology, communications, transparency and flexibility.  More times than not, you will find that the companies that have been in business through many transitions are more up to date than those with only a few years, or less, in operation.  More importantly, the 3PLs that have been in business through many transitions will also have a much better ability to adapt to future technologies and trends.  A company that has only been in business for a short time will have most likely utilized all of its resources to purchase the software, hardware, machinery and resources necessary to operate within current standards (or perhaps even slightly antiquated standards), but will not have the ability to adapt to any necessary changes within the near future.

Does the 3PL have multiple locations?

It isn’t so much the size of the 3PL, or even the number of locations, but the fact that a 3PL has multiple locations is a direct example of the company’s ability to network and provide communication between multiple locations, which directly relates to the ability to communicate to their customers.

Does the 3PL have a web presence?

While certain companies seem to be under the impression that a web presence isn’t for everyone, the truth is, when relating to any business, it is for everyone.  It is a necessity.  Notice however this was not limited to a “web page”.  There is much more that goes into a successful 3PL then a simple static web page.  There should be details, functionality, interaction, customer portals, billing and payment options, account/inventory access, communication tools and more.  Social networking and integration should play a part as well, so you are able to see reviews, testimonials, feedback and more.

Does the 3PL provide adequate transparency?

There are several debates on the effectiveness, and even the definition of transparency, when referring to third party logistics.  While some companies maintain that their expertise and experience should be sufficient in proving their standards of service, this is a very antiquated argument.  With today’s technological advances and communication protocols, companies should be able to see much more than they are accustomed to.  Real-time inventory tracking, account management, invoicing and account history, inbound and outbound activity, delivery and pickup scheduling, activity logs and more should all be made available to your company by any third party logistics provider.  The transparency of a logistics provider is imperative to ensure that your company is able to monitor all KPI’s (Key Performance Indicators).  Without the ability to monitor the performance of a third party provider, you lose control of your overall performance indicators to your customers.

With these tips to look out for, you will find an ideal 3PL for your company, which will lead you to a greater profit margin and better success and satisfaction rating overall.  Remember, when selecting a 3PL, you are putting the performance of your company in someone else’s hands, so you should make sure they are up to the challenge.

This entry was posted on Tuesday, February 19th, 2013 at 5:43 pm and is filed under Warehousing and Fulfillment Resources.