5 Tips on Choosing a Third-party Logistics Partner (3PL)

Third-party logistics companies provide their customers with sourcing, transport, distribution inventory, and warehousing services. They help streamline the supply chain by offering services that improve efficiency, save time and reduce costs while allowing customers to compete in a larger market. Every industry is experiencing the effects of volatility in the global economy. As gas prices surge, dragging transportation costs with it, selecting the proper third-party logistics partner has become essential for companies. Successful companies can focus on other initiatives such as product positioning, marketing, and customer acquisition.

Choosing the right logistics partner

Every global supply chain and logistics company is different. Some specialize in a specific industry, region, or unique business niche. Researching the third-party logistics companies used by businesses like yours may help kickstart your search. However, it would help if you considered some essential things when evaluating a potential 3PL partner. Here are five of them:

Logistics Services

Start your inquiries by requesting a list of services the third-party logistics company offers. Typical '3PL' services include inventory management, transportation, and warehousing. Most 3PL and logistics partners only focus on order fulfillment and transportation or cater solely to e-commerce businesses. So if you are an enterprise company or prime government contractor, such services may not be sufficient. You have to look deeper by asking for an exhaustive list of their services. Do they automate their processes, offer customized services, and track goods in transit? These are all critical questions to ask.

Carrier Relationships

Third-party logistics service companies often require that customers use their existing carrier partners. Long-term relationships with carriers can come with pre-negotiated contracts and valuable discounts. You should find out which carriers they use, how they negotiate prices, and allocate inventory to each carrier.

Scalability and Costs

Some businesses are inherently seasonal, with highs and lows during the year. Can the potential 3PL provider scale their services up or down based on your business needs?

Order volume or inventory can change dramatically based on several different factors. Can your future 3PL logistics partner handle these changes without changing rates significantly? Ask for a complete list of prices for every service they offer. Ask how these prices vary based on volume.

Technology

Along with scalability and costs, ensure your 3PL partner has enterprise-grade technology to keep up with varying business demands. Real-time inventory visibility is standard practice and helps with availability tracking and forecasting if needed. Make sure they have a knowledgeable IT team to help troubleshoot any issues that may arise.

References

The right third-party logistics partner should meet your current and future business needs and demonstrate a positive track record working with other businesses. Do your due diligence by calling references to learn how your prospective service partner responds to inquiries and problems. Are they creative problem solvers? How financially stable is the company? Do they barely meet expectations or exceed them consistently? Companies like Northfield offer personalized services and the scalability to partner with companies of all sizes seeking cost-effective supply chain and third-party logistics solutions.

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