Ten Steps to Finding your Perfect 3PL Provider
Ten Steps to Finding your Perfect 3PL Provider
Avoid the pitfalls of
finding the perfect 3PL to meet your specific requirements,
by heeding the following 3PL ‘do’s and
don’ts’.
By Anita Fleming – Transtore
[Logistics] Ltd, East Tamaki, Auckland.
Life would be a lot simpler if you were to stumble across a Genie bottle, which when rubbed the right way – “Poof!” the perfect third-party logistics provider (3PL) appears instantly at your doorstep.
In reality, just how should food shippers approach their quest for that magical 3PL provider without mistakenly choosing someone who could wreak havoc on companies’ supply chains, customer service levels, and reputations?
As you collect information on your next 3PL provider, keep these 10 essential metrics in mind:
1. Know What Your Needs Are:
It
is very important for you to know what you need, to ensure
the 3PL you choose will be able to perform those tasks.
There needs to be a mutual understanding, so each party
understands the business model of the other. Agree on which
requirements need to be met, and how we (as a team) can
achieve those mutual goals. Further, you both need to be
confident that together you can achieve the long-term goals
established by your business.
2. Say ‘No’ to
Cookie-Cutter Solutions:
Those considering a new 3PL
provider need to align themselves with an organisation who
is capable of providing flexible solutions and takes a tailored
approach to suit your specific situation. Ask potential
providers for examples of customers with similar needs
to yours, and ask them to explain how they provided
customised solutions to meet their specific
requirements.
3. Certify That Your 3PL Can Handle
Emergencies:
…and 3PL exceptions effectively. The
3PL provider should have the proper resolution tools in place to
facilitate exceptions quickly and successfully. This could
include things like urgent orders, specific packing
requirements, and sensitive stock.
4. Don’t
Choose a 3PL Based Solely on Cost:
Companies should
be wary of allowing cost to be the ultimate driver in their
evaluation and final decision in choosing a new 3PL
provider. Keep perspective on how your supply chain and
transportation model supports and keeps intact your entire
business model.
Normally, companies might look for the perfect triad of price, speed, and service quality – not realising how rare it is to find a provider who excels in all three areas.
As part of this consideration, it is wise to consider what your products can tolerate relative to cost. For example, a company moving sensitive products would be more concerned with speed and service, by comparison to a business moving a standard commodity who could choose to focus more on getting the best price.
Remember that you are unlikely to be able to get the kind of rates offered by your 3PL provider simply because of volume quantity discounts and established business relationships. You’ll also be saving on the hassle of calling round to get the best rates, which your provider will do on your behalf.
5. Make Sure Your Provider Has
The Proper Liability Coverage:
Check potential
carriers’ insurance to assure they have the proper
qualifications and assurances to haul your freight - should
things go wrong while your stock is in their care.
6. Certify That Your 3PL Provider Is Managing
Cost Fairly:
Gain a comprehensive understanding of
how the pricing with your potential 3PL provider will
unfold. Ensure you request a detailed proposal which
outlines all the costs associated with the service they are
providing.
You are also within your rights to hold your 3PL provider accountable for long-term supply chain savings for your company by managing cost within their operation – thus passing the savings on to you. On both sides it is good to try to be as transparent as possible with pricing, to ensure good communication and savings are maintained over the long term.
7. Find a
Provider Who Can Meet Compliance, Safety and Cargo Security
Requirements:
Ask your 3PL for their certifications
relevant to your supply chain and industry-mandated
protocols. If a logistics provider can meet the needs of a
diverse base of customers – each with its own challenges
and industry requirements – the chances of a successful
partnership are greatly increased.
8. Check
References and Claims History:
To gain a full picture
of the compatibility between you and your 3PL provider, talk to their customers whose businesses
are similar to yours. This will give you an insight into
daily operational functions - including service standards.
There is nothing stopping you asking what the worst customer
experience for them was.
Delving deeper, you might also wish to ask for a company’s claims history to understand the level and quality of their service. It is inevitable in the business of moving food products that there will be claims such as damaged cases and charge-backs, but this doesn’t mean you should automatically disqualify a provider. Use this information as an opportunity to understand if they managed the process professionally all while protecting their customers through the process.
9. Consider Choosing a 3PL Provider With a
Similar Culture to Yours:
Matching up with someone
who has a similar culture to your company is critical.
Business ethics and understanding go a long way in securing
trust and aligning business objectives. If you find the same
things important (i.e. timeliness or storage hygiene for
example), it will make the relationship run smoothly over
the long term as you’ll both have the same focus.
Clues on a suppliers’ culture might be found in their Service Guarantee or Terms of Trade documents. Read these thoroughly before committing.
10. Remember To
Communicate, Communicate, Communicate:
Are regular
meetings important to you? What are your stock reporting
expectations? How do you want to be communicated with when
it comes to daily movements and tracking? Put a wish list or
a list of non-negotiable requirements together and present
these as part of your 3PL requirements. Communication does
of course, need to be a two-way street, and needs to remain
consistent over time – even when there are no issues.
In Summary:
Once you have chosen what you have
determined to be the perfect 3PL provider service your
operation, make sure the relationship is maintained. Experts
agree that communication between a food sector business and
its 3PL provider is top priority in maintaining a close,
successful, and long-term partnership. The better quality
the relationship, the easier it is to avoid on-going
headaches with stock supply and quality.
Finally, seek a 3PL provider who understands your company’s unique requirements. A valuable attribute in a 3PL provider, is to find logistics businesses whose staff ‘network’ with each other, so that when an order is placed with one person, the others in the team are aware of it. A culture of shared knowledge among the team relative to your specific needs goes a long way in delivering a service that works for your business
ENDS