3rd Party Logistics Selection Tips

It seems everyone is getting into logistics. Shippers are moving into the 3PL (3rd party logistics) space offering freight management services and trucking companies are offering freight management and distribution services.  Here are some tips to consider when evaluating a potential 3PL.

 

Proven Track Record. Does the 3PL have a proven track record in managing businesses like yours? Many 3 PL’s focus on certain vertical markets or a certain portion of logistics (such as distribution, freight management, reverse logistics, etc.) It is critical that your business partner understand your business. This includes understanding peak seasons and specific regulations (healthcare logistics – very regulated) is very different from retail logistics. Your 3PL partner should be able to provide value and make recommendations to help you improve your logistics bottom line.

 

Stable, Secure, and Scalable Technology.  Does your 3PL provider have a robust, secure and scalable technology platform?  How often is the system upgraded and is there a formal release schedule for enhancement, bug fixes, new software versions, operating system upgrades and hardware upgrades.  Does the selected provider have a business continuity plan and is it exercised at least once a year.  How are changes coordinated and scheduled?  Do bigger customers have more influence? Where do compliance and regulatory changes fit in the modification schedule.  Is the system secure and is there a robust system of audit controls in place.  Does an outside audit firm audit the system and will your firm be able to bring in an outside auditor to audit the system.  Is there a robust set of reports and is information real-time and available to your firm.

 

Integration. The 3PL’s information systems need to communicate with your systems and your carriers and suppliers.  Is there a robust platform with a competent team that can make the necessary integration changes?  Does the 3PL have an established carrier network that allows for your information to be turned on through configuration settings? Does the 3PL have experience integrating to your software platform?

 

Processes, Procedures and People. Does the 3PL have a set of SOP’s (standard operating procedures) and WI’s (work instructions) on how your logistics will be managed and executed?  Are there quarterly business reviews that provide a recap of the previous quarter? Are problems resolved in a timely matter and with adequate explanation? Everyone wants to tell the success story but what about when things go wrong. How are people trained in the organization? Is there a specific team or workforce assigned to your account?

 

Size and Scale Matters.  Does the 3PL have a wide breath of services that it offers to its customers?  Can the services be bundled into a comprehensive offering such as private fleet management, warehousing and distribution, reverse logistics and transportation management services?

 

Price and Service. Does the 3Pl have competitive pricing and are there service guarantees?  What happens when service is missed or something is damaged? Is there a documented resolution process? Does the 3PL carry an adequate amount of insurance?

 

Logistics Trends Inc. can help with your 3Pl selection and RFP process. Please contact us for further information at email: jbisaha@logisticstrends.com or phone: 770 639-2230.