Third-party logistics (3PL) providers are a crucial part of almost every successful business. Whether its freight forwarding, warehousing, distribution, inventory management, transportation – third-party logistics (3PL) providers are already part of most businesses’ supply chains. While working with a third-party logistics (3PL) provider, many customers are faced with the question of how to get the most out of the logistics service provider.
As every third-party logistics (3PL) provider provides different services to their customers, there is no universal logistics process or structure that is suited for business. Every business has its own supply chain strategy and this necessitates a different structure and expertise. Hence, it is not always possible to create a standard metric to measure whether you are getting most out of your third-party logistics (3PL) provider. That being said, there are some tips that can assist in getting the most out of 3PL service providers.
Read on to learn 7 tips to get the most from your third-party logistics (3PL) provider.
Clearly out-line business needs: You as the third-party logistics (3PL) customer have the best understanding of what your business needs from outsourcing the logistics or international freight forwarding function. Clearly identify and document how you want your third-party logistics (3PL) provider to fulfil these business needs. The international freight forwarding company or third-party logistics (3PL) service provider should very clearly understand how and where their performance will impact your business and how they will be rewarded or penalised. The goals, expectations and key performance indicators should be communicated and must be updated from time to time as the business direction changes.
Align with your chosen third-party logistics (3PL) provider: To have an alignment between key people on both sides throughout the outsourcing process is critical. If one can achieve cultural alignment as well, that will be even better. To get the best outcome, alignment should start from the beginning of the relationship not in the end.
Check their expertise: Third-party logistics providers (3PL) develop their own expertise in handling logistics for different business verticals and even more deeply into various parts of the logistics and freight forwarding process. Before choosing a third-party, ensure that they have expertise in what you are outsourcing.
Select a one-stop solution provider: The more logistics companies you work with, the more challenging it becomes to integrate and manage them. Many third-party logistics providers in Australia provide warehousing, freight forwarding and transportation services, all with one Account Manager. Outsourcing to one logistics provider can be a winning strategy as is means less complication in communication and more alignment between your supply chain strategy and the execution of the 3PL to deliver on that strategy.
Integrate IT systems: Thanks to improvements in information technology (RFID, RF, EDI, GPS), managing the inward and outward freight forwarding and logistics operation is no longer a challenge. Now it can be quite painless to control excess inventory, shortage, pilferage, cargo tracking, and count hundreds of boxes. Integrating IT systems will reduce your risk and improve supply chain transparency and efficiency, but these benefits are achievable only if you insist on working with a 3PL provider that is focused on IT.
Stick to your guns: Logistics functions like warehousing, freight forwarding and transportation are key influences on business performance. The decision to outsource some or all of these functions is mission critical. Ensure that you do not let the third-party logistics (3PL) service provider get away with a shoddy performance. Be upfront with your expectations and demand results.
Evaluate performance regularly: Last but certainly not least, continuously evaluate the performance of your third-party logistics (3PL) provider on the agreed KPIs. Have regular review meetings and give honest feedback on their performance. Further they should be proactive in informing you on key developments in the supply chain ecosystem and the freight forwarding market which can impact your business.