Finding the right 3PL provider takes a lot of analysis and consideration. There are so many different options that it can be hard to know which one is the best one for your business, or will fulfill your current logistical needs, and can scale into the future. In this article, we cover some things that any online business can use to evaluate 3PL services and decide which one is best for their current fulfillment needs.
What is 3PL?
3PL (Third-Party Logistics) is a logistics service used by eCommerce companies to outsource order fulfillment and expand geographic reach, logistical flexibility, and ultimately to improve supply chain efficiency. When properly leveraged, 3PL services can help a business in a number of key areas.
- Cost Efficiency – Oftentimes, having to manage a complex logistical system is costly, and something many businesses do not want to spend capital doing. 3PL services alleviate the need for a business to spend excessive resources on fulfillment.
- Scalability – To match increasing demand, businesses often find scaling, both geographically and financially, a challenge. 3PL services offer online businesses the scalability they need to rapidly adapt and grow.
- Flexibility – Flexibility in today’s markets is crucial, and many businesses don’t have the resources to be flexible, nor do they have the years of experience needed to understand and weather the logistical storms of seasonality. With 3PL services, a business does not have to be as concerned with these challenges.
- Customer Experience – Expeditious order fulfillment is a must for any online businesses. Without it repeat business will suffer. 3PL services give businesses the reassurance that their orders will be fulfilled in a timely manner and that packaging will arrive to customers in pristine condition.
- Reduced Financial Risk – Maintaining a vast supply chain is costly for any business, and something that they afford at the expense of profitability, thus exposing themselves to greater financial risk. 3PL services reduce this risk by providing online businesses a method of outsourcing fulfillment at very low (almost non-existent) financial risk.
Things To Look For in a 3PL Provider
Looking for a 3PL company can be daunting so, to make things easier, here is a list of 5 key things you should consider when searching for a 3PL.
Logistics is complicated, and not something many have perfected. Obviously a 3PL can help with logistics, but are they masters of supply chain management? It is important to know how skilled or authoritative the services are within the world of logistics. If they seem unfamiliar with common topics or basic concepts of logistics, they might not be the best fit for you.
An unstable supply chain can have disastrous consequences for sales. Worsr still, it will have a lasting impact on performance and likely damage reputation, which ultimately harms customer loyalty. A stable 3PL service is paramount. Without it, your business’ profitability is at risk. Make sure that you know what a 3PL will do during certain scenarios. Will they ever halt services and, if so, when and why?
3. Operational History
How long has a 3PL service been operating? Do they offer other services? How long have they been offering those services? Do they have an existing logistical structure that they use for other clients? These are all questions you should ask before choosing a 3PL service. In general, a company with a healthy operational history is one that you can trust with you merchandise and fulfillment.
4. Reputation & Trust (A.K.A. Proven Track Record)
3PL services are a dime a dozen and some can be fairly nebulous. This makes it incredibly important for you to explore their reputation. Ask the service company for references or explore the success (or failure) of brands they have worked with. Oftentimes, you can quickly find out what their service quality is if you take a few minutes to know more about their reputation.
What is the point of outsourcing to a logistics provider if you cannot scale quickly and efficiently? The simple answer is that there is no point to contracting out to a service that cannot deliver or scale to meet with demand. Before you choose a 3PL, ask the following questions:
- What geographic coverage does it offer? Can the company fulfill orders internationally?
- Does increased demand result in higher costs?
- Will customer service be impacted by special requests (EX: RMA)?
- Will customer experience be impacted by the 3PL?
All these things need to be carefully considered before selecting a 3PL service.