6 questions you should ask before choosing a 3PL provider

choose 3PL provider

With an ever-growing pool of third-party logistics providers available to outsource logistical activities, learning how to select the right third-party logistics provider might be the difference between reaching existing clients and capturing new market share. Numerous things should be explored in detail before hiring a 3PL partner. Certain logistics firms function primarily as a collection of intermediates with connections to the Big Third Party Carriers. However, an increasing number of 3rd Party Logistics Companies are growing into the field of supply chain management and engagement in intermediary operations. Fortunately, the process of selecting a third-party logistics supplier can be divided down into six specific questions.

1. History of the 3PL Company

The concept of 3rd Party Logistics Companies was relatively unknown less than two decades ago. Trucking companies increased their offerings to include comprehensive solutions for small to medium-sized businesses (SMBs). At the same time, shipping brokers attempted to get shippers to collaborate in order to shift existing shipments toward capacity per load. Understanding the history of today’s 3rd Party Logistics Companies can assist you in comprehending how each company became involved in the process. Asset-based businesses have extensive expertise in procuring trucks and managing warehouse inventory. Alternatively, intermediary-based or non-asset-based third-party logistics companies have engaged in a bidding war with multiple carriers to secure lower costs and faster delivery times.

Additionally, a company’s past influences how well it engages in global trade. This is not intended to be prejudicial, but businesses in highly regulated regions of the world realise the critical significance of visibility in current business processes. As a result, they have made great measures to monitor current shipping methods and increase their revenues. Further, these third-party logistics companies may have additional resources in nations with complex import and export rules. 

2. Data Analytics and Process Strategy Offered by 3PL Provider

60% of shippers cite capacity as their primary concern when hiring a third-party logistics supplier. Secondly, 55% of modern shippers express concern about technological investment. Investment in technology does not necessarily apply to managed IT services, which we will cover later. It refers to the application of technology for the development of new, more efficient process techniques. For instance, a shipper may wish to utilise transportation management systems (TMS), which improve visibility and administration of transportation.

Automation has become an expectation for 3PL companies as a result of the Internet’s growth. Automated processes free up staff, such as managers, loaders, forklift operators, and billing professionals, to concentrate on the company’s objectives. As a result, corporate processes are optimised, and data analytics produces critical performance- indicators that further promote the 3PL and its customer base. 

3. Managed IT Services Offered by the 3PL Company

Managed IT services are one of the most frequently misunderstood facets of a third-party logistics supplier. Managed IT services relate to IT services that are provided remotely from the business’s physical location. For instance, the use of cloud technology to improve client communication and ensure the availability of e-commerce traffic falls under the category of managed IT services. Additionally, managed IT services could include helpdesk, technical support, off-site 3-D printing and data storage. To assist you in selecting a third-party logistics provider based on their IT solutions and services, look for the following:

  • Contracts with data centres to provide data storage and web hosting services. This assists in reducing the middleman, which results in savings for the individual.
  • Live technical support is available. Nothing makes people angrier than an automated customer service system that requires choosing from the following menu.
  • With regard to return requests and other client requirements, a 3PL should include reverse logistics and other logistical operations in their managed IT services. This is critical for businesses in high-tech industries or with time-sensitive post-sales activities, such as core returns or remanufacturing.

4. Predictive Analysis Offered by the 3PL company

While we’re on the subject of IT services and analytics, you should investigate what predictive analytics a potential 3PL offers and manages. The ever-changing market and consumer demands necessitate a forecast for determining inventory requirements.

Additionally, this term encompasses the concept of vendor management. Predictive analytics, for example, can identify periods of high volume and use this knowledge to optimise delivery schedules, routes, and order fulfilment procedures, ensuring that the item reaches consumers on time. Finally, the more predictive insights a 3PL provides, the greater and more efficient your response to consumer demand will be.

5. E-commerce shipping offered by the 3PL company

Where shipping was once viewed as an inconvenience for customers ordering things in retail, today, an entire, ethereal domain of Internet traffic exists. Purchases made through e-commerce websites do not require entry into the brick-and-mortar distribution network. As such, your consumers should have the option of shipping directly from you, the original manufacturer, to their physical location. Retail beasts such as Walmart and a few other megacorps currently offer this choice. However, Walmart has had more than 50 years to develop this process, and a competitive third-party logistics provider should offer comparable possibilities.

E-commerce is increasingly affecting industrial sectors, and transportation today includes the complexity associated with LTL combined with e-commerce. Companies such as tile firms and furniture makers require effective automated systems that interact with TMS platforms to achieve the same level of efficiency with LTL e-commerce shipping as with the shipping of small parcel packages.

6. Extensive Network of the 3PL company

Due to the growth of reshoring and the desire for customer proximity, shipping principles and processes have been modified, spanning across different locations throughout the world. By expanding their existing facilities, distribution facilities, and shipping networks, 3rd Party Logistics Companies have avoided the inherent difficulties of delivering products across the country to multiple locations, with many stops and nodes. Essentially, you want to know how extensive a 3PL provider network is at the moment. If you intend to launch an online business or possibly a few more locations, you must consider strategically. Inquire about a map of available shipping locations and the impact these locations may have on the terms of your contract.

By posing these six questions, you can discover the true motivations of prospective third-party logistics providers. You need to know where they’ve been, where they are and what they’re doing now, and how far they’re willing to go in the future. Consider their history, management of business strategy, the IT services they offer, the value of predictive analytics, and the legal jurisdictions in which the 3PL can operate.

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