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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.

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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

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