05 Nov The Right 3PL: How to Choose Wisely
You’ve been working with third party logistics (3PL) providers or freight brokers for years now.
Since the late 80s, 3PLs have helped manufacturers and distributors when capacity gets tight or when a shipper has a hot load that needed to be delivered yesterday. These aren’t real partnerships, but rather tactical relationships based on lane costs. These transactional arrangements are focused on basic lane coverage and they’ve probably worked well for you and your business.
But your company has grown, and what used to be fairly simple has become a rather complicated and expensive logistics operation. You need more than lane coverage and low costs. You need strategic help, tracking and visibility, data capture and analysis, as well as, relevant reporting.
You need a 3PL partner to play a strategic role in your logistics operation, to help you evaluate your supply chain and to assess necessary intervention, as well as, technology and systems implementations.
The 2019 Third-Party Logistics Study: The State of Logistics Outsourcing
reports that 91% of shippers believe the relationships they have with 3PLs are successful, and that 89% of shippers “agree that the use of a 3PL has contributed to improving services to the ultimate customers” while providing “new and innovative ways to improve logistics effectiveness.”
Furthermore, “shippers are increasingly aware that if they do not have the technological capabilities to accomplish their goals, they should partner with those that do. As the amount of available data increases, shippers and their logistics partners will need to be able to take the information and make it relevant as many 3PLs are already making significant investments in technology that allow them to analyze shippers’ operations. . . 93% of shippers agree that IT capabilities are a necessary element of 3PL expertise, and 55% of shippers agree they are satisfied with 3PL IT capabilities.”
To choose the right 3PL,
you must find a partner culturally and strategically aligned with your business. This means, you need a 3PL who fits your unique needs. A 3PL with experience, advanced investment in technology, and long-term infrastructure with commitment to strong relationships, accountability, and education.
Four Questions to ask Potential 3PL Partners
What transportation management system (TMS) do you recommend, and is this the system you use?
You’d be surprised by how many third party logistics providers want to sell you a system they don’t use. And if they don’t use the system they recommend or sell, why is that?
Is the TMS you recommend cloud-based?
Why is cloud-based important? Cloud-based systems offer security-sensitive information stored in remote cloud-based networks. Cloud-based systems offer flexibility–they automatically understand the amount of strain on the system and auto-scale as needed. The cloud-based TMS expands or shrinks according to your needs in real-time. And the cloud-based system is accessible–you can access cloud-based systems on a PC, a mobile device, a home-based device, or a work-based device. This allows you to work when and wherever necessary.
What does visibility mean to you?
Visibility is not just about tracking. You want and need a system agile enough to provide end-to-end visibility based on your requirements. And you want the processes designed to drill down into each shipment, to quickly display important information such as purchase order numbers, pickup and delivery times and estimates, or simply where you freight is at any given time.
Do you have core values, and what are they?
Your business is maturing, and because of this, you’re looking for a real 3PL partner to help you navigate these changes, to plan accordingly, to create a strategic outlook for now and into the future. It’s a good idea to know who you are working with and what values the team holds dear.
Of course, to make a wise decision, it’s important to meet several times. To get a feel if the 3PL team and the processes are a right fit for your business. When you consider outsourcing some or all of your logistics operation, you want a partner willing to get to know your business, form relationships with your customers, and offer value where you need it most.