Third party logistics (3PL) companies offer resources for companies to outsource all or part of their supply chain management. When you select your 3PL you are essentially selecting another member of your organization. The 3PL will act as an extension of your company and in the end any mistakes they make will fall back on you, so picking the best 3PL for your organization is essential. This article highlights some questions that you must ask before you select your 3PL. Knowing the answers to these questions will help you and your 3PL have a long and successful partnership.
First it is important to realize that there are three types of third party logistics companies. When you are selecting your 3PL, you should know what type of 3PL they are: asset based, management based, or an integrated provider.
An asset based 3PL is one that uses their own trucks and other equipment such as warehouses to operate. A management based 3PL is one that helps on the technical and managerial side of logistics. They don’t necessarily use their own trucks like assed based 3PL’s do. Lastly are integrated providers. These 3PL’s are either asset based or management based depending on what services are needed.
Your organization’s needs will determine which type of 3PL is best for you.
Below are some of the questions you need to ask before selecting your 3PL, this list is not comprehensive, but it does cover some of the most important questions you should ask.
1. Does the 3PL offer the services your organization needs?
This might sound like a silly question, but it is one that can be easily overlooked. Making sure the 3PL has the capabilities your organization needs is key. You need the 3PL offer the services your organization needs for the best fit and success.
2. Is the third party logistics company financially sound?
The last thing you want is to become completely invested in a 3PL and for the 3PL to go bankrupt or shut down soon after. When you select a 3PL you are most likely selecting a longer term business partner. Do your homework and check out the financials of your prospective 3PL to ensure they are financially sound.
3. Does the 3PL have good customer references?
One of the best ways to find out how a 3PL will treat you as a customer is to ask their current customers. Again, here is the part where you need to do a little bit of homework and research what the customers of the 3PL have to say about the 3PL. If the reviews are poor, it might make you rethink selecting that 3PL.
4. Does the 3PL have the required equipment, technology and personnel available?
You want the 3PL to work for your organization and your needs. It should be a red flag to you if the 3PL is short on equipment, technology, or even personnel because in the end you might be the one suffering.
5. Is the 3PL flexible and able to adapt to changes?
This question goes along with the last question discussed. A 3PL should be able to adapt to changes with your needs and organization. Make sure the 3PL you select is flexible to avoid issues in the long run.
6. Is the 3PL a good culture fit with your organization?
Making sure the 3PL fits with your organization’s culture is very important. Like stated before, a 3PL is an extension of your organization, make sure they fit with your culture for the most successful relationship.
Selecting a 3PL is a major decision. Make sure to ask plenty of questions to understand the 3PL for the best relationship.