Outsourcing your warehousing needs to a 3PL company makes a lot of sense, particularly when looking to expand and scale your business. 3PL companies specialise in all the necessary operational tasks that work synergistically to create an efficient supply chain. They are experts in maintaining equipment, hiring staff and tracking inventory. In many cases they do these tasks faster and cheaper and more effectively than a business managing these tasks internally. So, with all the providers out their offering 3PL warehousing, how do you go about selecting the right one?
Below are our 3 top tips for choosing the right 3PL warehousing provider.
- Technological sophistication – many companies make the switch to 3PL warehousing to avoid investing heavily in warehouse and transportation management systems. So look for a provider that is technically sophisticated. They should have operating systems that are scalable and you should make sure that their systems integrate effectively with your ERP.
Real time visibility and shipment event tracking should be high on your list of needs. There needs to be solid EDI communication between the provider and the carrier. Look for a company that invests regularly in improving its technology and implementing new functionality, as opposed to one that just maintains its legacy systems.
- Scalability – A 3PL provider that can keep up with your growth is crucial. You need a company that can not only accommodate your current needs, but your future ones as well. If you grow drastically you don’t want to be forced into changing providers. It’s better to develop a strong relationship with one company that can absorb any extra business that you may acquire.
- Financial stability – Find a partner with a long history and proven financial stability. It could be devastating to your business if your 3PL provider fails, so do your due diligence to minimise the risk. Ask potential candidates for a list of partners and get in touch with them. Ask them about their interaction with the company and if they have ever experienced any issues. How a 3PL provider handles its current clients will provide a good indication of how they will deal with you. Candidates that are stronger financially will have more resources to invest in you as a client and to provide the level of customer service you are after. They will be in a better position to take advantage of technological innovation and will be more likely to survive significant disruptions.
If you’re looking to switch 3PL providers, or seeking to find a new partner to help scale your business and take care of logistics, considering these three factors will put you in the right frame of mind to make your decision.