What Your 3PL Vendor Should Deliver

At its core, third party logistics is the outsourcing of any or several supply chain logistics functions to another company. Third party logistics can include transportation, warehousing, and distribution services, along with any of the offshoots from those core functions.

Different Types of 3PL

Third party logistics can be performed by companies owning their own assets or by non-asset based companies. For example, asset based 3PL providers may own a fleet of trucks or one or more warehouses. These companies provide the hard assets and labor force needed to fulfill one or more logistics requirements (such as transportation or warehousing). Non-asset based 3PL providers do not own the hard assets nor have their own labor pool, but act as consultants to integrate logistics functions from various providers for a client.

Services Related to Warehouse Management That a 3PL Vendor Should Provide

The core 3PL warehouse functions are: receiving, putaway, picking and packing, and outbound shipping. These competencies should be met by any 3PL vendor providing warehouse management. As the client, you are looking for the 3PL vendor best able to meet your inventory requirements. You want to reduce the cost of inventory management without yielding control over the processes which safeguard the lifeblood of your business. A 3PL vendor should provide effective tools for inventory control. The ability to track putaway with the latest technologies is a “look for” feature. Technologies like radio frequency identification (RFID) and barcode scanning expedite the putaway process and reduce human error. The 3PL warehouse should also offer efficient picking and packing procedures.

How to Select the Right 3PL Vendor

With more 3PL providers all the time, how do you know which 3PL vendor is right for your business? Begin by clearly identifying which tasks you are ready to outsource. Which 3PL vendor offers those services? You then need to clearly define your performance expectations and the standards you require in meeting your requirements. For example, what time frame is appropriate for order fulfillment? How frequently must inventory be rotated? Comparing costs between 3PL vendors is also important but can be challenging since there is no uniformity in pricing. Establishing cost per order will provide the uniform standard of comparison you need.

Final Steps Before you Choose Your 3PL Vendor

The 3PL vendor will need detailed information from you in order to provide an appropriate bid for your business. Be prepared to provide accurate annual and monthly shipping information (number of units, units per shipment etc) as well as any predictable fluctuations. Also be sure that the 3PL vendor’s information systems integrate with your own business systems and that their functionality is sufficient to meet all of your business needs. It is a good idea, before you make your final choice, to ask both new and long-term clients about their level of satisfaction with the 3PL vendor. Last, make an on-site visit to see your 3PL vendor in action. Making sure the 3PL vendor you choose is the right fit for you is imperative.

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