How to Choose a 3PL Provider: Considering Everything from Technology to Financial Stability

3PL ProvidersFinding how to choose a 3PL provider can become overwhelming when you need to focus on a particular geographic area and realize dozens of warehouses exist in the region. You may run across a few that seem perfect for logistics, yet you soon discover they don’t have the best equipment or experienced staff.

Then you have other fulfillment centers that may have everything you need, including longevity, but their location isn’t convenient for faster distribution. With frustrations like this, plus lack of time to vet warehouses, you need some expert help.

Here at 3PLCompanies.net, we can help you make a more educated decision on which 3PL warehouses are the best based on your geographic strategies. At the same time, we want you to know what to look out for in a 3PL provider.

You have a lot of things beyond just reputation to consider in the vetting process. With so many details involved in getting goods shipped domestically or to foreign markets, you need to dig deep in how a fulfillment center operates.

The Technology Platform

Speed is everything in shipping goods, and you already know this by seeing how major companies operate. Any 3PL company giving you complete efficiency requires innovative technology to help optimization of operations.

Experts note newer technologies like The Internet of Things and the cloud make 3PL companies operate faster and with more accuracy. When dealing with chain operations and freight shipping, you need immediate feedback through real-time data.

Be sure to check out what technology the company uses, and ask for a personal tour if their website doesn’t explain.

Growth Potential

Otherwise termed “scalability”, you need to know whether a 3PL company can grow along with you once your company starts expanding. It’s worth noting that scalability means bi-directional so they can accommodate the downs in your business as well as the extreme ups.

The important thing is examining exactly how well the company can operate when you have a sudden surge in customers. Business spikes can happen virtually overnight due to publicity. Look at the 3PL’s track record and see how well they performed for others who had similar growth patterns.

It’s overall better to pick a 3PL handling both small and large businesses so you know the scalability level is flexible.

The Financial Stability of Your 3PL

Just like investors do before acquiring a business, they need to know about how financially secure a company is. You need to do the same analysis with a 3PL since you’ll be depending on them for shipping goods long-term.

You don’t want your fulfillment center going out of business within a short time, leaving you in a desperate situation during busy quarters. The same goes for vetting the 3PL’s payment history so you know they won’t shut down for mismanagement. It’s possible to do this by looking at the 3PL’s business partners and finding out if late payments ever took place.

Understanding Your Industry

No 3PL warehouse can operate well for you unless they have a long history of working in your industry. If your industry is fairly new to them, you may play more risk that they won’t understand how to properly ship goods through ports and other regional outlets.

Make sure they have proper insight and close access to ports, roads, and state borders. Even if they say they can handle your industry, it’s worth remembering all industries work differently in the shipping process. As an adjunct to technology above, the warehouse’s commitment to technology can help in providing the nuances you need to make fulfillment work optimally.

Once you decide that it’s time to outsource some of your logistic procedures, you have to figure out how to choose a 3PL provider that you can trust long term. If you’ve had negative experiences with providers in the past, you know that making the wrong decision could lead to dissatisfied customers and loss of profit. If you’re venturing into the world of logistics for the first time and don’t have knowledgeable employees to rely on for guidance, it’s easy to get overwhelmed by the many providers currently fighting for your attention. This is one of the most important decisions that you will make on behalf of your company, but the following information will help you find the right provider with as little stress as possible.

Assess Your Current & Future Needs, Expectations

The process of selecting a 3PL provider starts with answering each of the following questions to assess your needs and identify your expectations and goals:

  • What are the limitations of your company when it comes to logistics? Some companies can handle some of their own logistical needs while others need to outsource everything from warehousing to transportation. You have to clearly identify what services are beyond your company’s capabilities so that you know which services you need your 3PL to provide.
  • What are you currently spending on logistics? If you’re a startup or aren’t currently storing or shipping products, you can use projected figures or estimates. You want to identify what you’re spending on logistics overall as well as on each element of your logistical process. It also helps to identify if you’re unsatisfied with any service providers with which you currently work. You will use this information when assessing 3PL providers to determine whether they can help you save money or will end up costing you more money.
  • What do you hope to accomplish by outsourcing to a 3PL provider? Are you interested in expanding into a new region, or do you need to reduce pressure currently on your small staff? You may have more than one reason to use a 3PL provider, so make a list that identifies every advantage to outsourcing your logistical processes. You can turn these objectives into goals that will guide your 3PL selection as well as the expectations that you have for the chosen provider in the future.
  • How might you use your 3PL provider in the future? You probably expect your business to grow and change in the coming years, and you don’t want to outgrow your third-party logistics partner. Look at your projections for growth and any projects that you want to implement in the future to determine what 3PL services may benefit your company in the long term. You may want to select a provider willing and able to expand services as needed so that you can develop a long-term relationship with one provider that you trust.

After answering these questions, you should have a clear understanding of what services you need your 3PL to provide today and in the future. Use this information to study providers and select only those able to meet your expectations consistently.

Ask the Right Questions

Armed with the answers to the above questions, you’re ready to start comparing providers. The first step is to contact us or visit our website to start the process of receiving your free 3PL quotes, but you will still need to make the final determination on which of those providers may best serve your needs. You may want to ask the following questions before making that final decision, but add other questions that relate to your business needs as well:

  • How many clients do you currently serve, and how many of those are long-term clients? Ideally, your chosen 3PL will have multiple long-term clients, demonstrating that other businesses have chosen to stay with them rather than switching to other providers.
  • Can you provide references? Reputable providers should not hesitate to offer up at least a few current or previous clients, and those clients should speak well of the 3PL.
  • What forms of communication can we expect if we decide to work with your service? You want to select a 3PL willing to meet with your company representatives at scheduled intervals, and there should always be a way for you to contact someone authorized to make adjustments and answer questions as necessary. Without communication, you can’t work effectively with any 3PL provider.
  • Are you able to accommodate future growth and changes expected for our business? You must have information available to clearly communicate expected growth and changes in order to determine whether the provider can grow along with you or not.

Take These Additional Steps to Ensure You Choose the Right Company

In order to make sure you find a good 3PL company that offers competitive pricing and will provide quality service, you have to take extreme precaution in the selection process. Follow these simple additional steps and you’ll end up on the right side of the coin.

  • Ask the 3PL company if they’ve listed ALL costs
  • See if they have any monthly minimum charges
  • Ask for volume discounts
  • Adequately compare the costs of in house operations versus outsourcing
  • Perform an in depth analysis of shipping and freight costs with the 3PL company
  • Check the vendor’s BBB rating
  • Make sure that everything is documented in a contract
  • Search the web for negative reviews about the 3PL company
  • Get a demo of their online reporting and inventory system
  • Speak directly with as many members of their team as possible
  • Visit their site to see the operation first hand if possible

You will cut most of the stress out of this process just by using 3PLCompanies.net to secure quality recommendations tailored to your business. We go through the enormous 3PL provider market and weed out the bad seeds so that we can suggest reputable, hardworking providers that customers like you can trust. You still have the final say on which provider you select, so it never hurts to check out our recommendations.