There are so many things to think about when choosing the right 3PL for outsourcing a logistics operation. We want to help you make the right decision, and choose the best logistics provider for your storage and distribution. We have gone into depth about the Types of 3PLs, Researching Providers and Digging In to provider options over the past few weeks.
Here are our top tips for choosing the right 3PL provider for your logistics operation:
“3PL means different things to different people, even within the industry. When you use the term 3PL you can be talking about storage providers, shippers, manufacturers and all of the different parties within the supply chain and logistics process,” says Greg Parupsky, VP, Client Solutions at Murphy Warehouse.
General Providers
These are 3PL providers that complete many tasks for their clients. They usually do everything from storage and fulfillment to inventory management and transportation. Generally they have many industry certifications and can handle just about any task that a client has for them.
Niche Providers
These 3PL providers generally are focused on a certain area of the logistics process. They complete specific tasks for many different clients. For example, a company needs a warehouse to handle their product fulfillment for an e-commerce store. The product is shipped in small quantities directly to the consumer. They do not have the warehouse space or manpower to complete the fulfillment. They may want to find a 3PL provider that specializes in e-commerce shipments.
Niche services can include services such as:
- Refrigerated/Freezer space
- Haz-Mat certified space
- Foreign trade zone
- Rail access
Freight Forwarders
These companies act as the middle man from manufacturers to retailers. They do not tend to own their equipment, and broker the business to other logistics companies. Freight forwarders can be considered 4PLs by some, due to the fact that they are an outside vendor who brokers out business to other logistics providers.
Understand specifically how a 3PL can help you achieve your larger business strategy. Where can logistics help improve your operational performance?
Number of Providers
Will you be using a single general provider to handle storage, and transportation? This is different for every company. How large is your project, and how will the numbers change over time? There are different ways of choosing based on this as well. Looking at one company with locations in different markets is a good choice, or having multiple providers throughout the nation is an option as well.
Company Presence
What areas are vital to your operation? Do you have a world-wide presence that ships from ports all over the globe, or are you a start-up looking to hit one large city and test the market? Those are the extremes, and most companies will fall somewhere in between.
Services Offered
The services offered by each different 3PL provider are extremely important when choosing a provider. Do you need specific services like rail services or e-commerce fulfillment? Make sure the 3PL providers that you are considering can handle any project that may come your way.
Submit RFP’s
RFPs can be submitted directly to a logistics provider or through a third party. When submitting directly to a company, responses are generally faster and more tailored to your specific company. When they are submitted through a third party, there are more providers that it can reach.
Feel free to check out our RFP Page and get a better idea of what we look for from potential clients.
Get Quotes
Once an RFP is submitted, you should begin to hear from representatives at your prospective 3PL providers. Pricing can be broken down many different ways and specifics about billing can all be customized for each client. Getting quotes from multiple companies can also show the type of service that a provider may have. If a provider is very hands on during the RFP and quote process, there is a good chance that their customer service is handled that way as well.
Learn about culture
Interview the potential provider to understand their unique value proposition. Can they deliver insight and teach me something to help me improve my operation? What makes them different and/or a better fit for you? We shared a story about a long time client that completely changed their company culture when a new owner took over the business. This partnership struggled after the switch and eventually dissolved.
The right culture fit is best found through strong communication including multiple types of contact and even visits to both the warehouse and at the client’s site. Communication before business takes place will help both parties know if it is a good fit.
Thanks for reading! Hopefully, knowing some of these ins-and-outs of the logistics industry can make choosing the right 3PL for your business a little bit easier. Check back next week as we continue to discuss the growing logistics industry.