The Top 3 Factors to Consider When Integrating a 3PL
In our blog, we’ve talked about the importance of forming healthy third party logistics (3PL) relationships. We’ve discussed how making your logistics partner a part of your team can offer you access to state-of-the-art technologies, capacity, expertise, and buying power on a scale not available to you on your own.
In addition, a 3PL can allow you to focus on your core business processes—in other words, partnering with a 3PL allows you to work on what you do best.
3PL freight partners provide benefits to you because they have formed direct relationships with a variety of regional and national carriers. Because 3PL’s combine the freight volume of many small- to medium-sized businesses, they are able to negotiate better discount rates and terms, thereby providing significant cost savings for you.
For small businesses in particular, partnering with a 3PL can provide a variety of benefits. Peter Foley, a counselor for a training partnership program with the U.S. Small Business Administration says, “3PLs have the logistics experience, knowledge, and software a small company does not have, and they cost less than hiring employees with such expertise. [They] can cut through red tape quickly to get a final answer, change a program, or massage a product.”
The key is to partner with the right 3PL.
However, do you know what exactly you should consider in evaluating potential partners? In our opinion, here are the top 3 most important things for a company to evaluate when considering a 3PL partner:
They are in good financial health and have a solid insurance policy.
First and foremost, you need to know that when you wake up, your 3PL will still be able to deliver for you. Ensure that your 3PL has a steady cash flow. Check up on their credit history. You can also ask the 3PL for a list of their other partners and speak to them directly about their experience working with the 3PL.
You will also want to request a certificate of insurance that will cover you and your cargo. If you see anything you don’t understand, request clarification in writing of any promises they make.
Technology is their passion.
One of the primary reasons to partner with a 3PL is because they have access to the latest technologies, so you can ultimately be more efficient. Ensure that your 3PL has an up-to-date IT infrastructure, so they can provide you speedy feedback on your freight and supply chain operations. They should have an innovation-is-king attitude and should always be updating their IT systems.
They are committed to forming a special, devoted partnership.
A 3PL partner should provide a customized solution for you specifically and should plan to grow (or scale down) with you as your own logistics evolve. They should be committed to maintaining open communication at all times. Your 3PL should provide a dedicated account representative, one who knows your business inside and out and can answer all of your questions and concerns, from those on invoicing to tracking.
An essential component to a devoted partnership is having a good cultural fit.Do you and the 3PL speak the same language? If you and your 3PL work and talk differently, then perhaps you should consider aligning yourself with a 3PL that is more similar to your own company.