In order to stay competitive, businesses need to always be looking for opportunities to make better use of limited resources, including personnel, equipment, facilities, and capital. For this reason, many companies wisely turn to 3rd party logistics (3PL) partners in order to achieve greater levels of efficiency, better customer service, and lower costs.
However, it’s important to know that not all 3PL logistics providers are created equal. Supply chain companies have different areas of expertise, and while certain companies may come in at a lower overall cost, the level of service and capabilities are often vastly different. A great logistics partner will be able to support a long term competitive advantage for the right price.
What you should consider when choosing the right 3PL:
1. Resource Availability
A 3PL partner may have a lower cost due to the smaller pool of resources available to them. Fewer locations, older technology, smaller fleets, and other factors can all play a big role in your company’s ability to meet the demands of an aggressive market.
Look at the network of locations that your 3PL has in place and weigh them against your long-term expansion goals. For example, if you’re planning on growing on a national level, you want to ensure that your 3PL partner can handle the demands in the areas you are focusing on. Keep in mind that the resources you need today aren’t always going to be the same resources you need in the future.
In addition, top-tier 3PL providers will have strategically-located facilities at the ports of entry to enable smooth import and export of goods across international borders. When shipping products to or from overseas, having the resources in place to handle the necessary processes can significantly reduce the risk of any delays associated with border crossing.
2. 3rd Party Logistics Knowledge & Experience
Another consideration is the level of expertise and industry knowledge that a 3PL can offer you in your specific industry. You’re going to want a team of experts that require very little vendor management with a wide range of hands-on expertise on how to make your supply chain work faster, leaner, and smarter. This knowledge can help keep you within your operating budget and lead to not only meeting your growth goals but exceeding them.
Experienced 3PL companies will have all the appropriate licensing in place and can help make sure that any regulatory concerns related to your products are handled correctly. Their experience also provides assurance that your products will be handled with the proper care, and that they are stored and transported in the correct conditions to reduce the risk of damage or loss along the various stages of the supply chain. When considering different 3PL providers, it can be insightful to take a look at the other businesses they work with, as well as the growth history and evolution of their company. If they are true 3rd party logistics experts, they’ll have the heritage to back it up and the client list to prove it. When you’re investing extensive capital in to your supply chain, you want the assurance that you’re making the right choices.
3. 3rd Party Support When You Need It
While we all expect operations to run smoothly in the supply chain, the reality is that there will always be occasional issues, some minor, some major. The difference between a minor issue and a disaster will depend on the support systems you have in place. This can be one of the biggest differences between 3PL providers, and it can have big repercussions for your business.
Take the time to thoroughly evaluate the 3PL provider’s support systems and customer service capabilities. You will quickly be able to identify which providers are delivering greater value through added service and support. Getting your operations back on track quickly and efficiently is critical to delivering on customer expectations, and having the right support systems makes all the difference.
4. Technology and Automation
Of course, it’s not just the physical resources and personnel that make a good 3PL partner. You also need one who can deliver the best insights that are derived from accurate data in order to guide you to better strategies for growth and success. Technology plays a big role here, and the implementation of systems to gather and transmit critical data can have a huge impact on your ability to adjust to changing market conditions and make better decisions based on your business’s analytics.
Automation of processes is another way that 3PL providers can deliver greater value and help your company boost efficiencies throughout your supply chain. Whether it is in inventory management, order fulfilment, demand planning or materials handling, automation can lead to cost reduction and improve quality control. Look for a 3PL partner that has an expertise in the right automation for your supply chain where it where it gives you the most long term gains.
Take a Step Back and See the Bigger Picture
As you can see, there are many different ways that third-party logistics providers are able to differentiate themselves. This is why it’s important to take a step back when choosing a partner and see a holistic view of what they are able to offer that goes far beyond the simple financial cost. By having a more complete picture of the benefits they can bring to the partnership, you’ll be in a better position to make the right choice for the future of your business.
If you’re looking for a leading 3PL with national coverage, leading edge technology, customized solutions and dedicated customer care, then contact the SCI team today.
Our logistics experts will answer all of your questions and work with you to achieve your goals of a smarter, more efficient supply chain that is ready for the challenges of tomorrow.