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Despite the effects of COVID-19 on supply chains across industries, third-party logistics (3PL) remains a crucial service for companies that serve customers across state and country lines. If today’s continued e-commerce boom has occupied your business with tons of orders, you might be looking to expand operations and outsource your distribution efforts to a 3rd party logistics provider (a 3PL) with an array of comprehensive services.

Do I Need a 3PL Partner?

Knowing the pros and cons of getting a 3PL helps you decide whether you really need a partner in the first place. If you’re unsure of whether a 3PL elevates your business processes and improves your service delivery, consider the following:

• Advantages
  • You save time, money, and energy. 3PLs offer a huge advantage on scaling your business up and down so you can meet demand surges. You worry less about additional expenses on storage space, equipment, and labour. Everything related to transport and distribution is in the hands of your 3PL partner.
  • You get guidance from industry experts. 3PLs eat transportation and warehousing processes for breakfast. They have access to important information, not just about the logistics industry, but the supply chain as a whole. Whatever industry you’re in, they’re up to date with the highs and lows, because of the network of providers and clients they’re building.
  • You can focus on your business. With transport, warehousing, and order fulfilment off your plate, you have more time (and brain power) to decide on sales, marketing, and other core aspects that need your undivided attention.

• Disadvantages
  • You have less control over logistics operations. Because you are not fully engaged in these processes, you might become fully dependent on the 3PL, losing the internal skills to perform logistical functions for your own company. Imagine the costs (financial and otherwise) when you end the partnership and you’re forced to get back into it on your own.
  • Your insights on visibility are limited. Handing over logistics operations to the 3PL means you aren’t 100% in the zone. While 3PLs make sure that you’re given details on your logistics processes on the daily and upon request, you also need to do your own research so you feel confident that everything is smooth sailing.
  • Your company image might be at risk. Branding and image are at the heart of a company’s customer relations. If your 3PL partner cannot stay true to your values and perform per your company’s service standards, this might be detrimental to the business in the long run.

Fortunately, choosing the right partner will allow you to bypass these disadvantages. Mainway Handling Systems offers turn-key materials handling integration. We develop first-rate systems from start to finish and turn them over to you so you have full control. Our solutions are customized so they meet the individual needs of your customers, preserving your brand reputation.

Decisions, Decisions: How Do I Know Which 3PL to Choose?

Now that you’re on the lookout for a 3PL that suits your company best, here are a few reminders before making that crucial investment:

• DO define exact and measurable KPIs

The first step to finding the right 3PL partner is setting your expectations with regard to performance. Key performance indicators (KPIs) measure how well a 3PL responds to your logistical needs, and help you track their efficiency. Before setting out, develop a set of specific KPIs such as:

• Inventory, order, and shipping accuracy
• On-time shipping percentage
• Cost per unit shipped
• Order time to fill
• Inbound receiving time
• Process returns time
• Return rate due to shipment or damage error
• Reporting schedule consistency

While 3PLs are expected to provide regular reports on their performance, you must be able to track their progress and measure their performance autonomously. Make sure the 3PL can give you access to information on operations as often as needed.

Once you know what you need, you can be able to give your prospective 3PL a full picture of your company’s goals. Being clear on your current and future business requirements helps you determine which 3PL agency you should partner with.

DON’T forget to consider:

• Scalability

Running a business requires you to think about the present and the future. If you’re on your way to significant growth, you need a 3PL that’s flexible enough to respond to incoming demand surges. Do they have enough room and manpower to handle an unexpected and massive order volume increase? Is there a system in place for order timeliness in case of a flux? Maintaining service delivery quality amidst drastic changes should be a priority.

• Location

What’s your distribution plan? Consider a 3PL that can accommodate your high consumption area. Your 3PL should be strategically close to you, so you can work together efficiently and manage them easily. Their fulfilment centres should be where a large number of consumers await your products. The closer a 3PL is to your customers, the faster the orders reach their doorstep. The sooner the order is fulfilled, the happier the customer.

• Technological Capabilities

It’s impossible to survive in the order fulfilment industry without sufficient technological systems and support to run your operations. You and your 3PL partner should be able to foresee the worst and prepare for it. Know their contingencies for an unexpected system crash. Do they have an internal IT department or is their IT support outsourced?

Automation is also key in ensuring efficient and accurate materials handling and warehousing processes. A 3PL should be equipped with the latest technology and hardware to provide accurate inventory reports, live inventory checks, and other necessary services that improve your company’s performance a hundredfold.

Mainway Handling Systems fully capable of addressing your automation needs with the cloud robotics platform.

• DO your due diligence

Your business has unique needs that need to be precisely met by your 3PL partner. To make sure your prospect is as good as they claim to be, you should:

• Meet them IRL

Unshroud the mystery of your prospective 3PL by arranging to meet in person. It’s important that you get as much info as you need from the 3PL itself. Understand how they manage their workers and their facilities. Discuss what you need, and how they can address each of them. Take a tour of their facilities so you can see in the flesh how the 3PL operates.

• Ask questions

3PLs are a huge investment, and it’s only right that you want to gauge how honest, sincere, and trustworthy they are. Talk to the management to see if they are passionate about what they do, and if they are deeply committed to customer service. Get a feel for their company culture and employee work ethic by talking to the management and asking questions like:

• Do you provide incentives for workers who meet or exceed performance metrics?
• How fast can you pick up and ship out my inventory?
• Do you offer value-add services including kitting, labeling, custom boxes, inserts?
• How quickly are returns processed to ensure my customers are refunded in a timely manner?
• Do you offer short-term contracts, or will I be forced into a long-term partnership even when I’m no longer satisfied with your service?

Your partnership with a 3PL should be anchored in trust. Before engaging them, see if they can provide references. Get honest opinions from parties both within and outside your networks. The information you gather from a thorough background check will help you make a sound decision on your prospective partnership.

• DON’T compromise quality over price

Competitive pricing is attractive, but it should not be the sole criterion for deciding on a 3PL partner. NEVER give up value just because the 3PL offers huge savings on your logistics costs. These savings, however attractive, have to make sense when seen in conjunction with the quality of their processes in place.

See how the 3PL’s pricing can affect accuracy and customer service. While it’s possible that great service can be achieved at the lowest price, you need to properly weigh your options so your business doesn’t suffer in the long run.

Are you looking for a user-friendly warehouse management system that meets your materials handling requirements? Get in touch with Mainway Handling Systems. We are equipped with cutting-edge technology and an extensive range of products that enable us to tailor-fit the most effective solution for each unique application. Call us at (905) 335 0133 or email sales@mainwayhandling.com to know more about our products and services!