Five Important Things to Find Out Before Partnering with a 3PL Provider

04.01.23 04:19 PM By Ernest

In today’s world of business, customers expect more and companies find that they must provide goods faster to keep them satisfied. The trend of massive companies to provide fast and free shipping to large customer bases means that all other companies need a similar model to compete, but not everyone has the massive infrastructure or resources of a company like Amazon or Wal-mart. For some very small companies, having someone pick, pack, and send orders from the garage might be satisfactory, businesses in the middle need a solution.

Enter in the 3PL provider. Third party logistics providers help businesses bridge the gap and offer services that expedite products to customers all over the world. From warehouse space in which to store an inventory, to inventory management, picking and packing services, shipping and tracking, and returns management, these companies are the experts in how to get your goods to your customers as quickly and efficiently as possible.

But not all 3PL providers are created equally.

As a savvy business-owner, it is important to know exactly what you are getting and how services mesh with the needs of your company. Asking questions and getting answers before signing on to any one service will go a long way to ensuring the right partnership for your business.

Services, Tiers, and Scalability

Perhaps the most important thing to know about any Third-Party Logistics partner is what exactly they offer. Different companies may not offer the same services, or at the same levels. Knowing what you need and asking questions that uncover if the partner is able to meet those needs will prevent any surprises after you’ve signed on.

Make sure to ask about tiers of service as well for different levels of inventory or inventory movement, and if those services scale to meet times of increased business or growth. A 3PL provider that cannot scale with the growth of your business may serve to hinder your goals rather than help meet them.

Consider if the company is willing to customize services for the businesses they work with. Do they fill the niche needs of their clients so that the logistics process becomes seamless? Or will you still have to work to, or hire someone to, fill those gaps? Make sure to take this time and the work needed into account when making your final choice.

Location, Location, Location

In a world where everything seems so closely connected, it might not seem like the location of the warehouse is important, but that couldn’t be more wrong. Unless you don’t mind paying way more than you should, aligning the location of your 3PL partner’s warehouse facility with where your products come from can save you a literal fortune. 

Cutting distance between the port where your products are imported and where they will be housed until sold means that you save miles that a truck has to take your products and the high costs of fuel that come with it. Furthermore, it saves time as well, meaning that you can get your products up for sale, and then into the hands of paying customers as soon as possible. Don’t underestimate the need to be smart when it comes to transport, and thus location, or you’ll risk paying too much just to get your goods in a position to sell.

Track Record and Reputation

Knowing the reputation of a company and if they have a record of meeting client needs and expectations can prevent issues later down the line. While it is never good to base a major decision on limited information or reviews, a good 3PL provider should be willing to offer a transparent view of feedback gathered from former or current clients. 

There is often a lot of information out there apart from what the company can offer as well. Doing your research and seeking out existing customers, or those who have used the service in the past, can shed a lot of light on the specific provider. While privacy laws prevent the partner from giving out names and contact information, simple searches online can often garner results as people generally want to share the good, and the bad, experiences they’ve had with any given company.

Likewise, take a look at their ‘typical’ customer profile and see what the 3PL provider feels is a typical customer. If your business lines up, then that may be the provider for you. If not, then you may need to consider your search.

Detailed Costs, Packages, Discounts, and Fees

Once you are able to identify if a given provider is going to meet the needs of your business and has the reputation to follow through, you need to identify exactly what the costs associated with the services you need will be. Does the provider charge per piece? What are the added fees to customize the solutions you need? What do the rates they quote you actually include? Knowing each of these things will help you add up the true costs associated with a given provider’s services.

Most 3PL partners also offer packages and discounts for volume, which can vary based on a few different aspects. Some offer discounted pricing models for the amount of inventory stored, or the length of time it is stored there. Other providers base things on a full package deal where picking, packing, shipping, and inventory management is all included in a single cost. Make sure that you know the difference and the pricing for all of the services you need so that there are no surprises.

Consider also any contracts that a provider requires you to sign and what the implications are of those contracts. This can add to the long term costs, as well as impact any off season financial impacts down the road.

Integration, Software, and Value Added Time Savers

Most 3PL providers these days offer a number of different methods for tracking the inventory that you have them housing, packing, and shipping. Software and technology integration is a given these days, but with so many options out there it is vital to make sure that what the provider is using will communicate with what you are using. Without the ability to integrate into the system you run your business with, you’ll be losing time and potentially money by chasing numbers and juggling multiple apps and programs. 

Just like other businesses, 3PL partners try to set themselves above their competition by offering value added incentives that could really save you time. Make sure to ask the company what makes them the best option for you and see what they offer that you can’t find elsewhere.

Brand Protection, NDA, and Confidentiality

Intellectual property and protecting your brand is just as important, if not moreso, than any other aspect of running your business. Make sure to ask what your potential 3PL partner will do to offer protection for your brand, not just your inventory. Do they work with non-disclosure agreements? What is their confidentiality policy? Beyond that, what are other clients saying about it? Always take the time to understand the company’s approach to this part of the partnership first, before signing anything. Not only will you be protecting the name you’ve made for yourself, but you’ll be saving future profits as well.

The Perfect Partner for Your Business

Enlisting a Third-Party Logistics partner can make all the difference when it comes to the growth and success of your business, but you need to make certain that you are pairing up with the right company. There are tons out there to consider, but they are not all created equally. Keep the preceding things in mind and ask all the questions you can before choosing which route to take. With the right partner, the sky’s the limit to the potential you and your business can reach.