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Key Factors to Consider When Selecting a Third-Party Logistics (3PL) Provider

third party logistics

Are you looking to outsource your supply chain operations or searching for a dependable third-party logistics partner to enhance your logistics efficiency? If your answer is Yes, you have arrived at the right page.

Based on a 2022 study on Third-Party Logistics involving over 300 participants, 73% of shippers using 3PL services reported enhanced customer satisfaction and the discovery of innovative methods to enhance logistics effectiveness. 

Choosing the right third-party logistics provider is not rocket science but requires thorough consideration. The 3PL services partner should be expert enough to handle your organization’s cost, customer service, and supply chain in the coming years. 

Plus, outsourcing to a third-party logistics company frees the business to focus more on its development and goals without getting distracted by day-to-day challenges related to the supply chain.

This article will delve into the factors to consider while choosing the right third-party logistic partner. Let’s dig into it.

What is a third-party logistics partner?

Third-party logistics partners are e-commerce business providers that handle outsourcing inventory management, warehousing, and order fulfillment. 3PL partners are experienced in using suitable tools and machines to fulfill logistics needs. They afford merchants time to focus on another aspect of business.

Besides, outsourcing tasks with an expert third party logistics service provider knows all the ins and outs of supply chain management. They help deliver your products on time and more efficiently. Furthermore, they are just like a logistics mentor for your supply chain needs.

Benefits of using 3PL Services

Businesses who are looking to use a 3PL can get many benefits from the partnership, such as,

Acquire expertise

Businesses collaborating with a 3PL service can gain helpful information and solutions regarding potential issues while shipping, create connections in the industry, and learn to streamline processes. Additionally, if the business wants to work with international trade, a third-party logistics provider helps them understand and comply with international regulations.

Save time and money

One of the essential benefits of working with a 3PL is their efficiency in helping you save money. If inventory management is outsourced, it helps to streamline work and focus on other aspects of business. A 3PL partner can help to identify potential cost issues in the supply chain and work to mitigate them.

Scale operations

A 3PL partner is essential to scale your business. A 3PL company helps expand reach for order fulfillment, gain seasonal transactions, save money on resources and labor, and give more time to focus on business activities.

Factors to consider while choosing a 3PL Logistics partner

Many 3PL companies offer different services, expertise, and specialties. Most importantly, they involve reliability, handling times, inventory management, service scope, carrier relationship, parcel rates, current clients, and special services.

Analyse scalability

Outsourcing work to a 3PL service provider is a long-term commitment requiring lots of investment. The business needs may be different regularly. They want to scale and grow as per market strategies. Furthermore, a lot of scalability comes under 3PL capacity. The more power the provider has, the more effectiveness surges in demand.

Evaluate stability

A stable supply chain goes in the long run. There are days when economic fluctuations occur, but businesses with a steady supply chain have better chances to come on top. A 3PL provider who is not an expert has no substitute or track record of fulfilling the entire shipment. 

If the business cross-checks the 3PL clients’ reviews during the selection process, they can ensure that the potential 3PL uses reliable methods, practices, and relationships.

Capabilities and expertise

Every logistic company has unique warehousing, transportation, distribution, and fulfillment needs. Usually, 3PL handles various industries, yet they have a particular area where they always win. Business should have a 3PL provider whose core motives and abilities meets with the specific industry.

Reputation

In fulfillment services, more than just transferring or storing goods, the reputation of the company storing goods is way more important. It is vital to partner with a well-respected third-party logistics company. They are proficient in finding solutions to challenges using their networks, teams, and industry connections. 

Customer service

When the deal is closed, outside the retail location- the most fragile interaction goes with a 3PL; whether it’s packing or sitting at the doorstep or truckload for how to pull a load or receive dock, a standard 3PL provider cares about business ethics and gives the level of services that satisfies the customer. 

Customization

A business selecting a 3PL provider knows all the services given by them. They already have technologies and processes with them. But, if they find a reliable 3PL company, they help to leverage their existing technologies, industry experience, and strategies for optimizing services. A 3PL provider with an advanced warehouse management system and a cloud-based system can easily integrate with businesses to give them a better start. The more customized a 3PL, the more fit it can be.

Omnichannel expertise

Currently, customer demands are flowing and dynamic across various retail channels. Omnichannel distribution and fulfillment have become the new standards to meet business needs at the right place and time with the best possible outcomes.

Hence, a third-party logistics company can handle everything from D2C order fulfillment to B2B retail distribution, subscription box fulfillment, and more. An omnichannel 3PL should easily understand the nuances of business distribution channels and adapt them quickly.

Priors continuous improvement

Once a 3PL logistic company is partnered with a business, it becomes an extension of the business. A third-party logistic partner is committed to giving excellence and continuous improvement with proven strategies. These improvements lead the industry to a better form of result, enhanced customer service, and cost-savings.

Accurate services

One of the most important factors to consider is accuracy. 3PL processes include inventory, shipping, and order accuracy to put things in place on time. If your 3PL provider has accurate inventory, shipment, or orders, the customers will be satisfied, and you will lose all money. 

Moreover, while selecting a 3PL partner, ask them about their Warehouse management system and accuracy rates. If their accuracy rate doesn’t cross 99.9% or they are not using the latest technology, it’s time to look at other options.

Responsible

The responsiveness of a supply chain management partner is measured by how well he handles the issues that are raised. While researching, you can ask the 3PL company how they manage supply chain disruption or charges in order volumes, destination, or level of stock. You can determine the company’s processes when you get appropriate answers to such questions.

Technology and automation

The third-party logistics company should provide advanced-level technology that helps streamline from order to delivery, which is crucial for fulfillment. Make sure they use the technology that best meets their needs. Hence, such technology can also be integrated with your order management system. It uses business intelligence for making informed decisions or having a team to provide top-quality support.

Choose BDS as your transition partner to 3PL

Choosing the right third-party logistics partner for business is simple, as it makes you remember to balance affordability and digital capabilities. BDS is your one-stop partner for cost-effective third-party logistics services in Australia. We leverage the latest technologies to ensure every operation runs seamlessly. It lets you stay ahead in the logistics market with sustainable growth and success.

FAQs

The role of a 3PL in logistics is to handle various supply chain tasks for businesses, such as warehousing, transportation, and order fulfillment, to make the process more efficient and cost-effective.

Businesses often turn to 3PLs to streamline their logistics operations, reduce costs, and focus on their core activities. 3PLs bring expertise and efficiency to various supply chain functions.

3PLs typically have security measures in place, including surveillance, access control, and inventory tracking systems, to safeguard inventory.

Selecting the right 3PL involves evaluating their experience, capabilities, and understanding your specific logistics needs. It’s essential to choose a provider that aligns with business goals.

Common KPIs include on-time delivery, order accuracy, inventory turnover, and cost savings. These metrics help assess the effectiveness of the 3PL’s services.

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