A 3PL, also known as a “TPL”, is a third-party logistics provider. A 3PL helps you and your business by providing expertise and best practices to support your supply chain. A 3PL specialises in various services including; warehousing, pick and pack, cross-docking, carrier relationships, inventory control and technology. It provides these services to increase your operational efficiency, help control your costs, and improve your customer experience and the global reach you can offer customers.
Here at CBIP we offer a full range of 3PL services and capabilities that will make a difference to your business. But before you embark on your 3PL journey or consider changing from your existing provider, there are important considerations to make. We have created a list of 5 MUST Dos before you select your 3PL provider.
MUST DO 1: Define why you need a 3PL
Before deciding on what 3PL provider you want to use, it’s important that you consider why you need one in the first place. Is it due to growth? A desire to service customers in more locations? Do you need to improve stock control & visibility? Reduce internal headaches? Or you don’t have the right skills internally to do it yourself? Outsourcing part or all of your business to a 3PL means you can maximize efficiency and improve your profitability. If it’s done right and works for your business model.
While outsourcing to a 3PL might work for some, it may not work for others. How would you decide if a 3PL is right for your business?
Naturally all businesses are different and any decision need not only be based on cost. Seeking the expertise of a supply chain consultant could be beneficial, as well as identifying the pro’s and con’s to your business and current operation.
(If you are an operator and have an existing provider, you need to review the 3PLs success. What has worked well, not worked well, and clearly define what your future needs are when considering a change, e.g. better geographical locations, cost improvement, enhanced technology or superior customer service)
MUST DO 2: carefully consider all COSTS. Not only what is presented to you
Stay away from running a standard RFP process that simply focuses on functional costings. You must consider all “costs” that attract value, beyond a line item cost e.g. how much of your staff’s time is tied up managing your 3PL, or a 3PL that focuses on reporting key performance indicators that directly influences your bottom line, such as the speed of an order being fulfilled.
When reviewing a 3PL costing try and bundle it into one format that works for you – each 3PL presents data differently and this can further add to the smoke and mirrors! We find it helpful when working with customers to break it down into the following sections:
- Bulk Transportation: moving products from your factory to your warehouse
- Inbound or Receiving: unloading products from your transportation provider to their warehouse
- Warehousing: usually a monthly fee based on the amount of space used and charged per CBM/Sqf or other metric
- Pick & Pack: collecting units from shelves or bins and packing them for shipment, discounted for higher volumes
- Local and International Delivery: delivery of product to your end customer
- Account Management: account creation and software integration
- Account Minimums: minimum monthly spend is generally required
MUST DO 3: reference check and visit the proposed locations
It is imperative that you request and check client references (at least 3), and specifically for your type of business. If the 3PL cannot provide references to you – this is not a good sign and should be considered a RED FLAG. It is equally important that you physically see the locations with your own eyes. Don’t let a video or pictures fool you.
MUST DO 4: technology, integrations and technical know how
It’s 2019, we live in a digital age! The right 3PL must be able to offer you an innovative and efficient technology solution. This should handle your growth and improve your company and customer experience. Historically 3PLs have not progressed well in this area. The development of client software e.g. ERPs can be slow and expensive. Put plenty of weight in your decision when it comes to technology and 3PL know-how with digital capability. This could save you a lot down the line.
MUST DO 5: ensure your 3PL can do more than just the core!
Whilst it’s important your 3PL does its core service well, be sure to make sure they have enough flexibility and can offer “value added services”. Common examples of these additional services include:
- The ability to provide extra services, e.g kitting/assembly/personalization/continuity plans
- Years in service and financial stability
- Contractual flexibility
- The length of the contract (ranges from 120 days to six months or more) and the flexibility of changing/adding terms of services (make sure to check on the task plan, time frames and responsibilities of all parties)
- Fulfillment flexibility and scalability
- Schedule site visits – check the facilities being proposed to handle your business
Would you like to learn more about what a 3PL solution might look like for your business? Get in touch for a free and open consultation with one of our team. Check out more here.