Four key things look at when choosing a 3PL partner
September 21, 2020
What is a 3PL?“3PL” stands for “Third Party Logistics” and refers to an outsourced provider that will manage the flow of goods in a company’s supply chain, including the timely delivery of products from manufacturer to the consumer. Companies across all industries and sizes often rely on 3PL partners to handle their order fulfillment and logistics.
When should you enlist a 3PL partner?Typically, the need for a 3PL partner is driven by order volume, velocity, space requirements, and resource needs. If you are shipping a high volume of orders on a regular basis and you anticipate further growth, it makes sense to start researching 3PLs. You’ll soon need extra space and extra labor to handle the demand you’re facing in a timely manner, and maintaining a positive customer experience means proactively managing business needs, rather than waiting until you’re overwhelmed to make the switch.
Another way to determine your readiness is by assessing costs. Analyze what it currently costs you to store, ship and manage your order volume, and make sure to include your own time (not just that of your employees). A 3PL partner will add some costs, but they will alleviate others. More volume equates to greater discounts, so you should be able to take advantage of volume-based shipping rates.
A final factor to consider in outsourcing to a 3PL is your ability to handle the unexpected on your own. Seasonality, flash sales, spikes in demand, etc. all impact your resources. Having a 3PL partner means that someone else manages these changes on your behalf.
Four key things to look at when choosing a 3PL partnerYou should, of course, seek out a 3PL provider that is financially stable and that offers the basic infrastructure you need, including global locations if those are important to you. Logistics startups can be attractive, but at a certain level of growth, the assurance that comes from a seasoned partner is invaluable. What other factors should you weigh:
- Scalability – Depending on your growth plans and volume fluctuation, it’s important to know whether your 3PL partner can scale up and down to accommodate changes in your business. You’ll want to understand storage fees, processing capabilities, and how they handle peaks.
- Experience – Beyond years in operation, make sure you know the scope of services your 3PL partner offers (B2B, D2C, Reverse Logistics, Value Added Services, etc.). If you’re only doing D2C sales, but want to move into B2B and use the same provider for both channels, you need to make sure that’s a possibility. If you’re considering a new product vertical, make sure it’s one that they can accommodate. Ask for references and learn not only the 3PLs strengths, but also its potential weaknesses.
- Technology – Logistics technology has come a long way in recent years. You’ll want to understand your 3PL partner’s warehouse management system, how it works with your order management system, and how order updates, shipping notifications, product returns data, incoming purchase orders, etc. are communicated. Visibility and flexibility is a big deal — seek a 3PL that is invested in technology updates.
- Cost & Performance – This goes without saying, but price matters. Look for competitive rates AND great customer support. The cheapest services are rarely the best, and you might find that paying a little more saves you time and money in preventing errors that occur from cutting corners. By talking to a 3PLs other clients, you should be able to get a sense of the value of the partnership. Beyond that, you are likely to receive a cost breakdown that includes the following:
- Transportation costs
- Receiving costs
- Warehousing fees
- Pick & pack fees
- Shipping costs
- Account set-up fees
Why Us?Ingram Micro Commerce & Lifecycle Services provides supply chain solutions that connect supply and demand. From cross-border fulfillment, warehousing and returns management across a wide range of consumer products. We would work with you to assess your needs and how we can support you to focus on growing your business, whilst we have the financial stability, infrastructure and footprint to become your 3PL provider.
Get in touch with us to discuss your needs.
Madelie van NiekerkMadelie van Niekerk brings over 10 years of logistics and eCommerce industry experience to her role as Senior Marketing Manager at Ingram Micro Commerce & Lifecycle Services, utilising her expertise to drive best practices for European initiatives in the Commerce & Technology sectors. Madelie is passionate about all aspects of delivering excellent service to our customers and strives to highlight and replicate partner success stories. When she's not traveling for business, she enjoys running, walks with her dog Bobbie, and photography.
Madelie van Niekerk 2020-09-21