Outsourcing warehousing to a third party logistics provider has several benefits for businesses. Not only are 3PL providers experts in all the necessary tasks- hiring workers, paying rent, maintaining equipment, keeping everything in check, etc, but these providers complete all the logistics tasks quicker and more efficiently than you could ever accomplish yourself as well!
Choosing a 3PL provider can be challenging and it should not be taken lightly. There are several factors which must be kept in mind when selecting one. We’ll discuss the few most important ones to ensure that you make the right decision about your 3PL provider.
1. Technological Sophistication
The best 3PL providers keep up with the ongoing changes in the technology and have the latest software and management systems for the supply chain work. One challenge you’ll face in choosing 3PL provider is finding the company that keeps up with technology and its roadmap and strategy aligns with yours.
Check how much is invested by the company in the technology and new innovation projects. This will reveal, if the company is maintaining a high-tech logistics platform. Confirm that the 3PL’s capabilities will be able to meet your automation requirements, plus any CRM or accounting requirements.
2. Keeping Pace with Growth
Make sure that the 3PL provider you select is able to keep up with your business’s growth. Scalability and flexibility are essential for a 3PL provider. Your provider must be capable of handling, not only the current requirements of your business, but future requirements as well since it will continue to grow.
Ideally, you should look for a 3PL provider that’s capable of taking on extra inventories. If you wish to access new market, your 3PL should be able meet those requirements.
3. 3PL’s Financial Position
If a 3PL is not financially strong, it may remain focused on its own stability rather than assisting you to improve your operations. Financially healthy 3PL providers have the right resources to help you with your business and provide the services you require. Check the financial position of 3PL providers by looking at their income statement.
4. Dealing with Disaster
Your 3PL provider must be capable of handling emergency situations and disasters. Disruption in supply chain can significantly affect your business and if your 3PL provider is not prepared to handle such disruption, you’re sure to incur huge loss. Ask about disaster preparedness, technology outages, labor shortages, weather-related disruptions and other emergencies that can affect your products.
5. The Talent of a 3PL Provider
The problem that many 3PL providers face today is the lack of talent in logistics and supply chain. If the staff is not experienced, the 3PL provider will not be able to meet the supply chain requirements. The expertise and knowledge in transportation and warehousing among the 3PL provider’s staff and management team can have a major impact (negative or positive) on your business.
A 3PL provider will be a great budget saver for your business, if you carefully research before partnering with one. However, if you make a wrong decision, loss will be inevitable. Therefore, follow these tips before choosing a 3PL provider and you’ll surely find the one that best fits the needs of your business.
