Finding the Right Third Party Logistics (3PL) Provider

Since the 1980’s businesses have been striving to refine their processes, reduce their assets and find new ways to outsource their logistic functions. The priority to concentre on core business functions has led to a rising demand for reliable 3PL solutions that help a company’s logistics run seamlessly and with minimal output.

FedEx were an early example of this change coming into fruition, changing the way transactions for business to business and business to consumer operated. The move allowed businesses to use just-in-time techniques that saved them warehouse space and ultimately saved them money. This was an early sign of efficient-consumer-response (ECR) techniques which paved the way for more efficient and smaller shipment sizes, saving businesses even more money. The mid-nineties hosted a continued emergence of collaborative management along the supply chain. Companies understood that they could serve their consumers better and faster for less by working with third party suppliers.

A Rise in Competition

The increased recognition of the clear money saving benefits to 3PL solutions has meant a huge rise in 3PL providers. This in turn makes finding the right one, a little more challenging. A good way to start your research and narrow the field is to network with comparative businesses in your industry and act on recommendation. Attend more networking events, go for a coffee with that associate you haven’t spoken to in a while or search online for testimonials on forums that will help fuel your search. Of course, the difficulty with an online search is that you will only see results from the 3PL provider with the best search engine optimisation (SEO). Turn your search upside down and start with forums, networking and testimonials. Reach out on Twitter or LinkedIn and ask your contacts who they would suggest approaching.

Many businesses put their request for information (RFI) out to tender. Allowing 3PL providers to bid for the work. This can be a long drawn out process but also an excellent way to make an informed decision. I would only go down this path if you are lacking confidence or struggling to get any recommendations from your peers.

Utilise Free Trials

A good rule of thumb is that a professional 3PL provider will have the option of a free trial. Once you have narrowed the field to two good providers start your free trial with two comparative projects you have running. You can then measure the results and benchmark their capabilities against each other. It is likely that each will have alternate strengths. One may have excellent customer service, while the other could be less friendly on the phone but more efficient. If at this stage you are still unsure of your next steps you could potentially issue an RFI to each of those providers to obtain more information at this stage.

Making Your Final Decision

Here are some questions you can ask yourself before you make the final decision – does the 3PL provider have…

• The services required
• The technology needed for the tasks you will have
• The appropriate warehouse space / dock capacity / warehouse personnel
• Healthy financial standing
• Suitable geographical locations for your network
• The flexibility to respond to changes
• Compatible environmental policies
• Detailed pricing for their services
• Good references
• Compatible working culture

I hope my article helped you make an informed decision about your 3PL solutions. I would love to hear your thoughts on the subject. Please also take a moment to check out the rest of my work on The Spoon Drawer and follow me on twitter for all the latest - @EdwardPhelan1