Getting the Most From Your 3PL Provider
As the debate between globalization and regionalization continues, getting the most from your third-party logistics (3PL) provider is more important than ever. Businesses need to be agile and able to not only proactively respond to customers, but also adjust in response to any unanticipated business change.
While many 3PLs offer similar services and capabilities, companies choosing a partner have many differences to consider. Do you need a niche provider? Asset-based provider? A specific geographic reach?
As you evaluate your options, you can also consider these tips to help leverage your 3PL relationship, according to John Haber, founder and CEO of Spend Management Experts.
1. Set goals and KPIs. Both your business and your 3PL partner should understand the established goals and key performance indicators (KPIs) you use to measure performance.
2. Do your research. Make sure you know your 3PL's track record. Check references specifically relating to the services you're interested in contracting.
3. Know what you want. Before committing to a 3PL partner, create a checklist, understand your needs, and set goals.
4. Ensure your 3PL uses the latest technology. Make sure your 3PL partner is up to speed with technology. Are you able to integrate with its system? Does it provide real-time visibility and tracking? What kinds of security measures has the 3PL established?
5. Treat your 3PL as a business partner. Your 3PL is not just another vendor. A 3PL partner should be able to scale its operations to your growing needs as well as any spikes in demand. In addition, a 3PL partner should understand your business, and be able to anticipate needs in advance as well as make recommendations.
6. Know the financial status. Imagine if your 3PL partner suddenly shut down and left your operations at a standstill. Also, be wary of 3PLs that have a large concentration of business with a small number of customers.
7. Make certain the 3PL meets your needs. A 3PL should be able to provide multiple modes of transportation such as truckload, less-than-truckload, intermodal, rail, and air, as well as warehousing services and support. Your 3PL partner should be able to recommend the best options based on your needs, and provide shipment analytics and reporting.
8. Plan for new markets. Can your 3PL support you as you expand into new geographic regions and/or new services? Make sure you understand not only its capabilities, but also its capabilities by geography.
9. Incentivize performance. It's important not only to establish realistic KPIs, but also to hold regular meetings with your 3PL, and offer rewards for good performance.
10. Consider future acquisitions. The 3PL market has been consolidating in recent years. Consider the market while conducting your research and what a possible merger could mean if your 3PL is acquired.