Third-party logistics (3PL) service providers are a crucial part of almost every successful business. They are becoming increasingly important to empower and enable efficient supply chain ecosystem which is essential for gaining competitive advantage. While working with a 3PL provider can be a highly beneficial, it is important to know some critical measures to take while choosing a 3PL provider.
In this article, we give you some top tips to select a right 3PL provider for your company and to make the most of your partnership with it.
Lay down a diligent selection process and transparent evaluation criteria to have the most suitable 3PL service provider as your logistics partner.
Evaluate your potential partner on factors critical to your operations and customer services.
Clearly identify and document how you want your 3PL provider to fulfill these business needs.
Before choosing a third party, ensure that they have expertise in what you are outsourcing to them.
To get the best outcome, alignment of business goals as well as cultural settings should be attempted from the beginning of the relationship.
Outsourcing to one logistics provider can be a winning strategy as it means less complication in communication and more alignment between your supply chain strategies.
SOPs (Standard Operating Procedures) constitute standard procedures discussed and mutually agreed with timelines. Having clearly defined SOPs can reduce anxiety and stress during the transition for both sides.
Clearly discuss and get into agreement on SLAs (Service Level Agreements) and KPIs (Key Process Indicators) with your logistics service provider. With SLA/KPI documents, measure the performance of your 3PL provider.
Have regular review meetings and give honest feedback of your 3PL provider on the agreed KPIs.
Ensure that you do not let the 3PL service provider get away with a shoddy performance. Be upfront with your expectations and demand results.
Have them use your product. They will use this knowledge when handling the product in the warehouse.
The open relationship and passion will encourage them to come up with better solutions to improve your service or cut costs.
If your 3PL performs outstandingly and provides cost savings, split the savings and share with the operations team.
Now that we have identified the evaluation criteria that will help you find the best 3PL partner for your business, what’s next?
Apply these parameters to narrow down your choices. Still left with more than one provider who meets all your criteria? Here, is our final bit of advice: “Efficiency matters, so does enthusiasm.”
An efficient partner might get the job done, but an enthusiastic one will go the extra mile to boost your logistics results.