With demand skyrocketing, sales up and restrictions down, it may be time to partner with a third-party logistics provider (3PL) for your ecommerce or retail business.
Overall, 3PLs are improving technology and capacity to meet consumer expectations and navigate ongoing supply chain issues. In 2020, 83% of businesses believed having a 3PL partner helped them improve their customer service experience.
The logistics industry has exploded recently, making it more and more difficult to find a 3PL that offers the capabilities and functionality you need. High-growth multichannel brands need a 3PL that can handle the complexities of their operations.
3PL partnerships are intended for the long term. It takes time to properly research and evaluate your options, so you want to partner with a 3PL that has what you need for your business needs today and in the future. This is especially true if you’re looking to scale.
Here are some questions to consider:
- Do I have big product launches planned for the future?
- Am I looking to expand into new or international markets?
- Where do I expect my business to be in the next year, five years and ten years?
All of these factors will impact the 3PL you choose. A 3PL partner offers a strategic advantage to boost productivity and mitigate risk, but you want to be sure that the 3PL you choose can handle your needs and support manageable growth.
When you’re considering 3PLs, pay attention to capacity and capabilities. If you have high growth and additional volume, it’s important to have a 3PL partner that is equipped to handle the complexity.
For example, if you increase your sales of the majority of your inventory on multiple sales platforms, you will need a way to track and optimize your workflows across multiple sales channels and SKUs.
Here’s some of the criteria to look for:
- Scalability: A 3PL should have the ability to support your business now and as you grow to reduce costs, mitigate shipping delays and improve the customer experience.
- Multi-site operations: A 3PL partner should have a vast warehousing network in key operational areas to optimize shipping and delivery.
- Cost-effectiveness: Partnering with a 3PL helps businesses reduce costs by providing access to different services and streamlining processes.
- Flexibility: An adaptable 3PL is important for an adaptable business. 3PL partners with multiple shipping options, such as integrated logistics that include land, air and ocean freight to provide reliable, on-schedule distribution.
The long-term planning you’ve done for your business outlines your goals and needs with a 3PL partner. Use this to direct your research and find the most appropriate 3PL partners.
Here are some traits to look for:
- Reputation: Your 3PL should have a strong brand reputation in the industry with minimal error rates and a consistent track record for on-time deliveries and customer service, not only for the end customer but for the business partners. Check online reviews and testimonials, ask for recommendations within your network and see if the 3PL has any references.
- Safety and security: Your 3PL should have high security and safety standards. With many of your products being stored in a 3PL’s warehouse, you could potentially have thousands — or millions — of dollars at risk. Make sure the 3PL takes your investment seriously.
- Technology: Technology is one of the greatest assets to logistics companies in the wake of supply chain disruptions. Partnering with a tech-savvy 3PL ensures you have access to innovative technology solutions that streamline your processes.
- Business continuity and risk management: 3PL partners should have a contingency plan for disasters or crises that can impact your business processes, such as the COVID-19 pandemic.
As mentioned, the 3PL partnership is supposed to be for the long term. Before you commit, verify whether the 3PL is the right choice for your business. Consider:
- Value-added services
- Claims processes
If possible, do a “test run” to ensure that the 3PL partner offers the capability you need for your business.
Partnering with a 3PL isn’t a small, impulsive decision — it’s a decision that can significantly influence your business, for better or worse. Choosing the right partner comes down to understanding your business needs and thoroughly researching your 3PL options to find the provider that can fulfill your obligations and support your growth.
David L. Buss is CEO of DB Schenker USA, a 150 year old leading global freight forwarder and 3PL provider. He is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.