How to select a third party logistics provider?
A third party logistics company provides a platter of services that can help integrate one’s business supply chain efficiently. Businesses nowadays are increasingly focusing on their core competencies and choosing to outsource logistic matters; in fact, over 85% of Fortune 500 companies utilize 3PL services. Various factors need to be understood before picking the right candidate:
1. Financial Stability
A partner provider with proven financial stability mitigates the risk of loss and delay in processes. It is advisable to check the payment history and performance of a partner before entrusting them with outsourcing the logistic procedures. By doing this one can be assured of no sudden halts or losses owing to mismanagement on someone else’s part.
In today’s time, more and more companies are looking for third party logistics providers who can cater to their tailor made requirements. It is important to establish whether a 3PL provider will be able to scale their services up and down following the company’s growth while providing the best possible quotes. One way to understand is by studying how the service provider accommodates existing businesses larger and smaller than one’s organization.
3. Quantification of Value
One of the most important exercises that one needs to do before committing to an agreement with a service provider is to study the impact of such collaboration on sales and ultimate profit for the organization. The partnering proposition should be quantifiable by value concerning providing lowest costs, excellent customer service and so on. One can gain significantly from a detailed evaluation of potential contenders.
4. Network of Resources
One of the biggest advantages of hiring a 3PL is gaining from their developed and established support networks. One needs to carefully analyze the vast supply networks which would eventually become open to use for them in collaboration with an individual third party logistics provider. By choosing a resourceful partner, one can gain with lower overheads, volume discounts, and the fastest possible services, which would have been otherwise unavailable or costly in-house.
Want to know about the difference between 3pl & 4pl service providers? Do read here.