Today, ninety percent of Fortune 500® companies rely on 3PLs for outsourced logistics and supply chain services, according to an Armstrong & Associates report. Whether you’re a global enterprise or local manufacturer, how promptly and efficiently you react to customer orders has a direct bearing on customer loyalty, retention and earnings.
Rising complexity of freight management and technology-driven logistics has businesses of all sizes turning to 3PLs to help them drive efficiency, cost savings, and visibility into their supply chains.
A successful relationship with a 3PL comes down to choosing the right provider and creating a partnership. When you’re assessing potential logistics partners, it’s important to look beyond the questions like, “What lanes do you run? Where do you have the capacity and how many carriers do you have set up in your network?”
When you dig deeper, like looking closely at a company’s financials and operational structure, you learn more about how a 3PL or carrier will perform for you over the long haul.
How to Properly Vet 3PLs
To thoroughly vet the capabilities of a would-be logistics partner, break down your analysis into four key areas:
1. Operational structure and communications
2. Carrier relationships and interactions
3. Financial strength and insurance coverage
4. Technology capabilities
Operational Structure and Communications
Look for how the provider treats its customers. Can you contact them anytime with questions? Do they provide you with a broad team of experts that can easily handle all the transportation scenarios your company contends with?
Choose a company that’s big enough to move a large volume of freight, but nimble enough in operations where no customer is considered too small. Work with a company that can quickly scale service from local to national. It shouldn’t matter if you’re a first-time customer or long-term client, the right 3PL will help you find the best solutions for your specific logistics needs. Here are a few more points to consider:
Carrier Relationships and Interactions
When evaluating a 3PL’s carrier network, consider how it treats its carrier base.
And from the carrier’s perspective, how easy is the broker or 3PL to conduct business with? Is there great communication? Do they genuinely care about their carrier partners?
Financial Strength and Insurance Coverage
It’s important to select a stable 3PL with a solid financial track record of strong profitability and growth. Effective 3PLs must be financially sound to pay carriers quickly, invest in their own business operations, solutions and technology, and be in healthy financial position to take advantage of innovations that will both protect and advance your business. Use the following checklist to review a company’s financial strength closely, and check bank references:
To minimize the risk of disruptions, audit the 3PL’s various insurance coverages and operations to ensure they provide enough coverage to meet your minimum levels. Review and check-off the following items:
Advanced application of technology throughout your supply chain helps a company become more efficient, increase productivity and gain a competitive advantage. Make sure the 3PL you choose provides a robust TMS with the following capabilities:
Finally, we encourage you to contact or call at least three customer references for each 3PL you’re considering. References help you validate a company’s range of service capabilities and provide you with insight into how a prospective 3PL performs over a span of years.
Learn how a 3PL can drive overall cost savings and efficiency into your supply chain. Connect with an expert to see how GlobalTranz fares against your 3PL checklist. Call 800-768-8695 or Contact Us