7 Things to Consider When Choosing a Third Party Logistics (3PL) Provider
When it comes to outsourcing your logistics requirements, you’re probably scratching your head wondering where to begin. With so many providers to choose from, and with many offering a one-stop shop for transportation, warehousing and distribution, the 3PL that’s right for your business’ requirements can be a tough decision. At John Good, we can offer individual elements or an all-encompassing solution covering transportation, storage, distribution, fulfilment, and customs brokerage to name a few.
To help you draw up a shortlist of 3PLs, here are seven things to consider when evaluating potential third-party logistics partners.
1. Experience & Proven Track Record
If you’re going to trust your logistics requirements to a third party, you need to be confident they will provide you with a reliable and professional service. Of course, the proof is in the pudding, but there are some indicators you can look for to test a 3PL’s credibility.
How many years have they been established?
Do they have experience in the locations and markets you operate in?
Can you see customer case studies or speak to their customers for references?
What results have they delivered for their clients?
This information is crucial to understand if they have the capabilities to handle your business.
In addition, whether they hold any accreditations or memberships of industry bodies is also a good sign that a 3PL takes their service seriously. Look out for affiliations such as:
- British International Freight Association (BIFA)
- The Institute of Chartered Shipbrokers
- The Road Haulage Association (RHA)
- United Kingdom Warehousing Association (UKWA)
- International Air Transport Association (IATA) Cargo Agent
- IATA Dangerous Goods regulated agent
Some 3PLs like John Good also hold Authorised Economic Operator (AEO) status, an internationally recognised quality standard demonstrating the company’s role in the international supply chain is secure and their customs controls and procedures efficient and compliant.
Most companies choose to work with a 3PL provider to make their operations more efficient or to expand; either way, it’s likely your needs will change as your own business grows and develops. This is why it’s vital you choose a 3PL partner that is agile and has the flexibility to support you as you scale your business and cope with increased demand.
Discuss your future needs with the 3PLs on your shortlist to understand their capability to ‘grow with you’. They may have some credible customer examples that demonstrate how they already do this for customers with similar needs.
Working with a 3PL provider should drive efficiencies and do this effectively, you’ll need a 3PL that recognises the importance of technology and innovation. Can their systems communicate or integrate with yours? How will you access data and analytics about your operations? Will it be in real time and accessible online? As well as the day to day communication between your business and the 3PL, take the time to understand their approach to continual improvement and how they adapt to accommodate new technologies. Technology is changing all the time, and you’ll need a 3PL who is ready to adopt innovations that will make operations more efficient and cost-effective.
4. Tailored Solution
Good 3PLs don’t offer generic out of the box services; they consult with their customers to provide bespoke solutions tailored to their specific needs. Rarely will a customer have the same requirements as another, so being offered a standard one size fits all solution isn’t a good sign. Rather than merely being a supplier, a 3PL that understands your requirements will become an extension of your organisation and a reliable partner who will support your growth strategies.
Case studies are an insightful way to determine if the 3PL works in partnership with its customers. Any good 3PL won’t object to you speaking with its clients so you can learn about their experience, in fact, if your potential 3PL provider is reluctant to provide client contact details, this could be a warning sign that they might not deliver what they promise.
Communication is essential to a good relationship with your 3PL provider. Naturally, in the world of logistics, there are circumstances of which 3PLs have no control over, and inevitably there will be occasions when things don’t go to plan – which is why excellent and prompt communication is so important.
Consider the tools available that will help you communicate, from the people working on your account to the data you’ll have access to analyse performance. For freight forwarding, being able to track your shipments online may be a priority, or for warehousing, a warehouse management system that gives you total inventory control for calling off your delivery requirements might be essential.
Most 3PLs will offer system interfaces with their customers’ systems, sharing data and real-time information on products and stock levels, between manufacturers, distributors and retailers.
6. Cultural Fit
The values and culture of a business can provide an excellent insight into what the company is like to do business with. Consider the company structure, ownership, the knowledge and experience of their people and their approach to social responsibility and their level of engagement in the local community, all of which can be a good indicator of a 3PL’s culture.
The cultural fit between two companies can be the difference between a successful or unsuccessful partnership.
7. Strategically Located
The best 3PLs have a well-established and extensive network and excellent relationships with partners, ensuring smooth logistics worldwide. If you know where you want to move goods to or from, ask about the 3PL’s network in that particular area. For example, if your distribution requirements are in a specific regional area then it might make sense to select a 3PL with facilities in this area, however, if you’re distributing all over the UK, a 3PL that can offer port-centric logistics may be a better option. With a network spanning 42 countries, John Good is a prime example of a 3PL with excellent global reach.
By following our checklist above, you should find yourself a reliable 3PL partner who will help streamline your supply chains. If you’d like more information on how you might benefit from outsourcing your logistics needs, please contact our local specialists who will be happy to advise on the best third-party logistics options for your business. We have dedicated teams of experienced professionals all over the UK.
Alternatively, you can also contact the John Good Shipping team centrally at firstname.lastname@example.org.