Once you launch an eCommerce business, you learn more about logistics than you may have wanted to. This is why finding a third-party logistics provider is a smart decision. Â
Offering to take charge of a company’s logistics operations, third-party logistics providers can provide a range of services that help reduce responsibility and financial burden.
Setting up a complete logistics infrastructure can involve massive changes and development that early-stage startups might not be able to afford.
As the name implies, third-party logistics companies take responsibility for carrying out all logistics operations, namely:
- Â Â Â Receiving Inventory
- Â Â Â Storage
- Â Â Â Packing Inventory
- Â Â Â Shipping Inventory
In addition to the above, a 3PL provider might also offer Value-Added Services (VAS) like kitting, labeling, etc. These operations require ample space, equipment and personnel that small businesses probably wouldn’t invest in early on.
The fact that startups also have to work on the product and other avenues of business development, it’s recommended for small-sized businesses, particularly those engaging in eCommerce to off-load logistics from their plate by finding a 3PL provider.
And if you’re a running business, chances are that you’re regularly questioning how a 3pl charges nd whether your choice of a 3PL is right.Â
So, how do you go about finding a new 3PL?
How to Find a New 3PL
· Internet Searches
Initial internet searches with your industry name can give you many options of possible 3PL providers but just because someone can rank well on a search engine doesn’t mean they’re the best in the business.
What’s more, is that most companies marketing themselves online often don’t specify the exact niche or industries they can’t or haven’t worked with. It’s easy to be deceived by a smart website and great sales pitches.
But that doesn’t mean you should go completely old-school and find people that don’t work with modern ERPs. Finding the right partner will inevitably take more than just a few searches on Google.
Places like the Izba Exchange, 3plogistics, 3plmanager, logisticslist and others are also the go-to for fulfillment and 3pl providers. Â
· Referrals
The second most common way to find a 3PL is asking around. With the rise of eCommerce businesses, it’s easy to find someone in your circles who knows a few names you can check out.
However, make sure to not believe everything you hear just because the referring party is trustworthy.
Verifying a 3PL Provider
You’re responsible for due diligence, and that includes verifying the credibility of a possible 3PL via FMCSA license tracking. It doesn’t take much to log on to the Federal Motor Carrier Safety Administration (FMCSA) site and add the provider’s information to verify their license.
You can also ensure that the 3PL you’re considering complies with safety, bonding and insurance regulations that work with your business and industry.
By conducting interviews and testing customer service in addition to verifying reviews, one can learn a lot about a company they’re considering to hire.
You can ask for information such as profit and loss data, service level agreements and possible issues you can expect throughout their operations right off the bat.
Interview questions should be challenging and should involve descriptive and evaluative scenarios that help you gauge backup strategies and other disaster preparedness and management capabilities to determine whether the provider could let you down in a future supply chain crisis.
Once you verify a company’s standards, you have to see what they’re working with. You want the machinery, equipment and workforce but you don’t want to pay the cost for features and/or services that you’re not making use of.
That is to say, if there are digital services like ERP integrations involved in their invoice, make sure that they’re relevant to your requirements.
Before You Decide
Once you’ve asked for proposals, chances are that you end up with a variety of prices and different reasons stating why they’re so.
It’ll ultimately be up to you as a business owner to choose what you go with. However, before you go ahead and sign a contract, consult with supply chain consultants who can audit 3PL providers after assessing your needs and providing you with the most advantageous solution to your problem.
When it comes to auditing, it’s better to identify possible performance measurement criteria and issues in communication with providers early on.
As a company looking for their services, you have the right to dictate your contract and the terms you work with to a certain extent.
Let us help you decide the best way to streamline your 3PL infrastructure and scale your business. Book a consultation!
