6 Strategies for Finding the Right 3PL Partner
RFP season is upon us. It’s the time of year when shippers request bids and plan their optimal logistics strategy for 2018. Shippers are increasingly involving 3PLs in the request for proposal (RFP) process for access to tens of thousands of pre-qualified carriers, industry expertise, and advanced logistics technology that provides supply chain visibility and operational efficiency.
But pricing is only one factor influencing how shippers award logistics service contracts. Most shippers favor service over price. A partnership with a 3PL can provide tremendous value to a shipper’s supply chain, but finding the right partner can be a process. Below are 6 tips to help you through your next round of RFPs.
- Consolidate shipments to increase volume: Look for opportunities to consolidate your shipments. Consolidation decreases overall costs by increasing volume and efficiency. It also helps you avoid loading dock congestion and can result in fewer accessorial charges.
- Plan and budget for high-demand periods of the year: Look ahead and remember there will be times during the year where higher-demand for trucks could impact your costs. Produce, harvest and holiday seasons place a higher demand on the nation’s trucks, which in turn could increase rates.
- Leverage locations and condense length of haul: Shippers can save time and money by strategically using distribution centers and condensing length of haul based on the location of your customers. Using a nationwide network of warehouses to shorten your line hauls will also help decrease your cost of transporting products to final destinations.
- Understand paper rates vs. truck rates: Sometimes what looks straightforward on paper, like line-haul distance, doesn’t reveal additional details that could affect a bid, such as pickup or delivery appointments and hours the loading dock is open. A simple 100-mile haul on paper, could take two days if the consignee can’t accept a shipment that arrives after 4 p.m., which would increase the cost. Make sure to provide enough background information so you receive accurate quotes.
- Establish strategic partnerships: Instead of focusing on price and commodity-based services, look for ways 3PLs can be consultative and bring value-added operations to your business. A strategic partner is constantly looking for opportunities to save your company overall costs. The most effective partnerships evolve when you integrate your firm’s ERP and supply chain systems with the 3PL’s TMS or other technology platforms to provide complete supply chain visibility.
- Communicate objectives and important KPIs: Service quality is as important as price, so be sure to tell potential service providers what you’re looking to accomplish, and key performance indicators that are important to your business. A good 3PL will hold themselves accountable and benchmark for continuous improvement to ensure they’re helping make an impact on your business. On-time pickup, on-time delivery, tender acceptance or rejection percentages, and EDI compliance are a few examples of typical KPIs.