1. What Is The 3PL’s Level Of Technological Sophistication?
It’s no wonder why 3PLs can take extensive amounts of time to respond to customer requests; many 3PLs have many clients in a complicated business. A 3PL wants to establish identical processes across their base of clients in order to save time, so making sure your 3PL is adaptable to continuous changes in technology is vital to having a shared roadmap.
How can you tell? Simple: Do your research. What is that 3PL’s annual investment into its technology and I.T. budget? How much of that budget is dedicated to the development and innovation of solutions for customer problems? Or is the budget just used to maintain its current systems?
Make sure the 3PL is able to integrate with your own technological requirements, from automation and order routing to inventory management tools and accounting.
2. Can The 3PL Keep Pace With Your Growth?
A 3PL may be able to handle your current needs, but what about when your needs grow and your business scales upward? Your 3PL needs to be able to accommodate and expand alongside your business; the ability to adapt to your needs is critical. Constant communication between the 3PL and its clients is vital to understanding their planning and forecasting so they can adapt to a growing business.
3PLs must have the capacity to flow with the peak seasons of its client. During the holiday rush in retail, the 3PL must be able to accommodate a surge in the needs of their supply chain.
3. How Strong Is The 3PL Financially?
If a 3PL isn’t financially stable enough to stand on its own, it certainly won’t be able to help improve your business. Vetting the financials of any partner are important, but with 3PLs being capital-intensive businesses, financial strength can be the deciding factor in partner selection.
A partner that has the resources to invest in their clients’ success and growth, as well as support their own financial situation is the aim. Ask a potential 3PL partner for their financial and profit/loss data in order to make your own determination.
Is your 3PL partner stable enough to deal with significant disruptions? Are they in a position to take full advantage of innovations that will benefit your business?
4. Is The 3PL Prepared For Disasters?
A disruption or change in your supply chain significantly affects your company’s bottom line, so make sure your 3PL partner is prepared and ready for dealing with logistical issues.
Ask your 3PL partner about their disaster preparedness, labor issues, technology outages and weather-related transportation issues that pose risks to your product supply chain.
5. How Deep Is The 3PL’s Talent?
The supply chain and logistics industry is currently in a talent drought. When you choose a 3PL partner, consider the experience and competencies of its staff. The level of expertise within a 3PL partner in certain areas such as warehousing or transportation can make the difference between a gain or a loss.
Talent levels fluctuate from 3PL company to company, so identify the depth of each potential partner’s talent pool. Is there an established line of succession in the company where the level of expertise in an area is not diminished? Inquire about the company’s emphasis on training its employees.
6. Do They Offer Business Intelligence And Solutions Beyond The Basics?
A 3PL partner should go beyond the basics when it comes to technology and I.T. Some 3PLs are connecting their ecommerce customers to relevant tech providers, which offer insights on industry-leading practices and networking. These providers supply a connection and exchange of knowledge within the 3PL industry as a whole.
Ask your 3PL partner if they conduct market research and to include you in their findings. Do they bridge the gap of communication between you and industry experts?
7. How Do They Stand On Your Needs And Metrics That Matter Most?
Find and compare potential 3PL partners with the metrics that matter the most to you and your business. Posing questions on their methods of managing potential issues, along with demonstrating their processes in a transparent way can help compare partners:
- Are there order volume minimums?
- What measures are in place to scale with my company’s growth?
- Will they be connecting me with industry experts?
Do your research on how a potential 3PL partner operates their business. When making such an impactful decision that can severely affect the time and money spent on operations, committing before you’re sure of your partner can be a massive mistake.
8. Do They Have Excellent Industry References?
Your company’s 3PL partner will have significant impacts on your day-to-day operations. Don’t go into your working-relationship blind. Ask for the 3PL’s partners and their history of working with the company.
A reference for your 3PL partner shouldn’t be good or okay, it should be glowingly positive. A 3PL’s references should be speaking to the character and culture of the provider; was that 3PL’s relationship with its client a mutually beneficial one? Regardless of being focused on products or services, a 3PL should be providing much more return on investment than simply efficiency.
9. Can They Show The Impact On Sales Throughout The Process?
Attaining the lowest costs doesn’t automatically equal improved sales. Logistical projects are in essence marketing projects, where the methods and operations of a 3PL partner, such as in the realm of customer service, directly impacts sales numbers.
No 3PL partner wants to deal with customer service issues because of their providers tunnel-vision on its monetary (financial?) costs.
10. Does The 3PL Have A Central Location?
Selecting a 3PL with either a central location or multiple locations is a great advantage when deciding upon supply chain strategy. More locations allow more efficient shipping, so do your research on the locations your possible 3PL partner operates from.
Determine if the locations of a potential 3PL partner better suits your company’s logistical needs. Having widespread locations near major methods of transport (such as near major highways, railways, ports and airports) allows for a more efficient fulfillment process overall.
Bottom Line
Overall investment in 3PL and 3PL partnerships has never been higher. Analyzing which 3PL partner fills most of your logistical needs, while being a reputable and financially stable company, can help your company stay ahead of the competition.
Be diligent in vetting a potential 3PL partner, asking pointed and specific questions to determine their level of detail and competence in solving your logistical issues.
Want a personalized consultation to discover what 3PL solutions can do for your business? Contact PFS today!