This is Part Two in a two-part series. Ready Part One here.
Use the following areas of consideration to guide your search beyond your easily identified needs:
- Limit your search to just three potential 3PL providers.
With so many options, you need to be sure you are actually comparing apples to apples. Narrow your field by sticking to a maximum of 3PLs for your consideration. This will give you a focused list of features to work with and avoid time wasting. If you find that one of your choices still isn’t a good fit you can replace it with an alternate option.
- Use an enforceable, mutual NDA
In order to get the best information from a 3PL provider, you may need to reveal some competitive information about your company. Your potential vendors should be comfortable with a mutual non-disclosure agreement that allows you to explore the proposition of working with one another without legal ramifications.
- Explore the financial stability of your 3PL.
When you outsource logistics you’re putting a large portion of your business’s success in someone else’s hands. This can clear off your team’s plate, but it can also be a problem if your 3PL has financial trouble. As you evaluate your top three options, you should ask for a list of partners you can speak with. Ask the other business partners about their history with the 3PL provider – has there any been any disagreement? Lack of follow through? Payment problems? If your partner isn’t financial stable, it will have a negative impact on your business.
- Ask questions about the 3PL’s track record.
Finances are just one area that needs consideration. A logistics provider should have a good overall track record with other clients. They should have a positive reputation in the community, multiple long term clients and good customer service ratings. Their track record with other companies will be an indication of how they’ll treat your business and your customers.
- Tie improvements in process to sales.
All logistics projects actually lead to better marketing for your company. When your logistics are stronger, your customers are happier and that produces a quantitative benefit for your business. You need to note the impact on sales and view your 3PL choice from that perspective.
- Inquire about scalability.
Ideally, your 3PL choice will help you grow your business and your orders will increase. A 3PL that you partner with should be able to efficiently scale up to meet your needs. Your sales growth should not be hindered by their operations process. Bi-directional scalability should also be considered – if there’s a seasonal drop in sales or a shift in the market, your 3PL should be able to scale down as need be. Seeking a 3PL that has smaller and larger clients can help you ensure their ability to meet your needs at any level.
Choosing a 3PL provider is an important business decision. Crunch your own numbers, figure out your own needs and then gather information in these seven areas to make the best choice.