choosing a 3rd party logistics company in the new year
It is the most wonderful time of the year! The holiday season is upon us. If you are a business owner, it is also is the time where you are reflecting on the past year and planning for the next. If you do not have a Third-Party Logistics Provider (3PL) and are looking to partner with one come 2020 or if you are unhappy with your current provider, here are some insider tips to navigation through the 3PL selection process.
- Decide if you want to outsource on your own or switch to a 3PL. You should determine the value to change, your return on investment, system complications, and an overall strategy (including time) to complete this process.
- Identify the right 3PL partner. There are a lot of providers in the market, but it is important to find the right fit for your company. You need to determine if you need your 3PL to be commodity specific, industry specific, geographic specific, technologically driven and so on. Create a list of what you are looking for in your ideal candidate(s).
- Learn what the 3PL true capabilities and competencies are. Do your research and don’t be afraid to ask questions. Make sure throughout the selection process you are comparing apples to apples. Create a timeline for potential suitors so they may propose their capabilities against what you have defined as your needs. You should anticipate 3PLs to disrupt your needs in the bid process, for a good 3PL will tell you what they know as best for your processes and not what you want to hear.
- Sign a contract or service agreement with your provider. Show them exclusivity so you can start the negotiation process. The 3PL will charge a nominal cost for their time and effort to this point and beyond, but this phase will help show how the two company cultures will mesh. A quality 3PL will tie in service-level agreements to financial incentives for both parties. The right partner will focus on savings goals, targets for implementation dates, and have contingencies based on near-term returns, as well as a more friendly long-term return. Be aware that the 3PL and the client have static costs, profits to be maintained, and inflation concerns, so make sure everyone is looking long-term and avoiding the one-sided negotiation.
- Decide on your support team throughout the implementation process, as well as the on-going execution process. Both sides will need the proper team members throughout for continued success. Do not be afraid to remove individuals from your team and request for potential changes on your 3PL’s team. Change is never a bad thing if it is done for the right reasons for both parties involved.
Third Party Logistics Providers come in all different shape and sizes, certain 3PLs excel in technology or specific services, some are more scalable than others, some are set for more long-term success, while others help short-term to build your road map to success. A proper decision on what 3PL is right for you will ultimately change the way your organization will operate for the better.
At NOTS Logistics, we can provide fully sourced 3PL services to our clients. We will be happy to sit down and discuss if we are the right fit for your needs. For more information, contact us today: https://notslogistics.com/contact-us/.
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17848 Mockingbird Road
Nashville, IL 62263
Phone: (800) 642-5436
Fax: (618) 478-5356