Before you Commit to a 3PL Provider, Ask These 5 Questions

Manufacturers and retailers used to value 3PLs for their physical assets.The very idea of outsourcing transportation and logistics functions evolved as all the elements of the supply chain became part of a single management perspective.  Thirty years ago, pricing was king, contracts were short, and performance was measured in three-year bids. That has all changed. It seems like only yesterday when "3PL" was just a new acronym thrown about at industry conferences and logistics trade magazines to describe a different kind of transportation and warehousing company.

Today, Spartan Logistics is appreciated more for our cerebral approach and adaptability to define your strategic direction and execute it.  Let’s say you are the owner of, or you are responsible for, a company that sells or distributes footwear to a segment of the population. Before commiting, ask these five questions of a 3PL provider:

1. How Difficult Is Our Product To Distribute?

The capacity for distribution varies from one 3PL to the next. Not all 3PLs are created equal. Spending extra time to obtain information from the prospective 3PL partner at the outset is far more efficient than having to change providers every year or two because the fit isn’t quite right. You need to take stock of how much product you need to distribute and, more so, how difficult your product is to handle—consider size, shape, and weight. When you have a better understanding of your product, you will know how well your 3PL can meet your needs. 

2. Can the 3PL Offer “White Glove” Service?

Some offer great value, while others offer a premium "white glove" service in designing your customer's experience. Some have robust technical capabilities and the flexibility to offer custom integrations, while others are extremely limited as it relates to anything software. Some offer same day processing reliability— others require a 24 hour notice to get to your order. Some work with startups doing as little as 250 orders per month, others require 250 orders per day.  When you partner with a 3PL, you merge both of your reputations—your company and theirs. Their history as a company is now a part of your reputation.

3. How Much International Trade Can They Manage?

How often are you working with manufacturers from other countries, and how much product are you relying on them for? Part of evaluating a 3PL will depend on your international trade needs. Some 3PLs will have the capability to process international imports—others won’t.

4. Can They Scale Their Operations to Your Growing Needs?

When evaluating a 3PL, you’ll need to think about your customers’ needs first. How much product are you going to need to distribute per quarter, and can the provider manage the volume? How fast can you gauge how much product you’ll need to distribute in the next month? It’s important that you have an accurate idea of who your customers are and if the 3PL has the capability to scale their operations to your growing needs. Your business is not static. It changes with the season. You will need your logistics operations, wherever they are housed, to scale up and possibly scale down. Scalability and flexibility are the true advantages of a good 3PL.They should be trained professionals that know what to do in a time of crisis. Spikes in demand, both anticipated and unforeseen, can be a supply chain nightmare for manufacturers.  Effectively managing these spikes can “make or break” a company in terms of profitability and long-term consumer loyalty.

5. What Operational Barriers Do You Anticipate?

This question will likely flip the script on the 3PL. This will require the provider to think quickly on their feet and anticipate any challenges that might arise from your supply chain requirements. It also provides an opportunity for you to both be on the same page, as you’ve likely already worked out (or seen before) where the obstructions will arise. If the 3PL raises them, all the better; but if you have to coax them, their solution(s) will help you to decide if they’ll make a great distributional fit.

A 3PL has to identify with your business objectives, growth plan and customer service culture for the long-term. In the end, this will also provide manufacturers the bandwidth to focus on their core competencies of research and product development.