Having the right third-party logistics partner is vital to the function of your business. The right partner can help you improve efficiency, control costs, and deliver exceptional customer service, but the wrong one can devastate your business. Here are some things to look for when choosing the best third-party logistics partner for your business.
Do Your Due Diligence
The logistics industry is growing, so new businesses are showing up overnight. It’s important to do your due diligence in choosing the right partner for your business. If you are looking for your first provider, it’s important to seek out partners with the resources and capabilities that matter most. If you’re leaving a previous provider, make a list of what you liked and disliked, then look for providers that offer similar services.
Third-party logistics providers should have the capability to integrate into current systems or the knowledge to find a solution that satisfies your needs and goals. You should also consider the provider’s industry experience, brand stability, and financial history. Look at everything, including owned vs. rented assets, operating regions, and compliance history.
Speaking to the provider is a good start, but you should conduct external research to gain an understanding of the customer sentiment and general reputation. Read reviews, good and bad, and see what the company did well. You can also ask for references from past customers, which any reputable logistics provider should be happy to provide.
Technology Solutions
Technology is revolutionizing the logistics industry, and you want to make sure you have a logistics partner that offers the technology infrastructure you need to succeed. Look for providers with their own technology for their services, such as warehouse management solutions, inventory analytics, fleet tracking systems, and more. If the provider offers additional technology solutions, such as fleet tracking using RFID, that’s a plus.
As more and more technology solutions are being used in supply chain management and logistics, companies that don’t take a proactive approach to innovation may be left behind the curve. Find providers that are willing to adopt new technologies as needed.
Diverse Services
Logistics providers may offer a range of services or they may specialize in certain services, such as industry or commodity services. The options may include shipping, sourcing, transporting, customs management, and other individual services, such as multi-function supply chain management. You may be able to find providers who specialize in different aspects of the supply chain as well.
If you can find a provider that offers additional services, you can get plenty of value from your partnership. These may include rush order, product kitting, quality control, IT asset management, reverse logistics, and more. Evaluate your individual needs and see if value-added services are beneficial for your business.
Omnichannel Experiences
Omnichannel retail is an important trend in the business world to improve the customer experience. Any third-party logistic provider you consider should understand the value of omnichannel commerce and how it can be used to enhance the relationship between your business and your customers.
Search for logistics providers with proven industry performance, repeatable business models, or an in-depth understanding of your business type. You may want a provider with specialization in different aspects of the supply chain, or maybe an end-to-end supplier would be the better choice. Consider not only your current needs, but your future needs.
Optimized Distribution Networks
When you’re considering a third-party logistics provider, evaluate their warehousing asset ecosystem. Your chosen partner should have a network with optimized distribution to suit storage on domestic or international routes. If your provider doesn’t own these warehouses, you could be vulnerable to quality control or theft issues.
It’s important to consider the sizes and capabilities of the facilities, their locations, and the volume of goods the provider usually handles. For example, what is the volume per day, week, month, or year? Are the warehouses located near major transit areas like railways and airports? Does the provider have systems in place to handle high volume and potential delays during busy periods or congestion?
Customization Options
Some industries may benefit from customization options with a third-party logistics provider. Effective providers offer options to enhance your business processes like inventory optimization to serve customers more efficiently. Discuss any customization options with your prospective providers to see what’s available.
Brand Alignment
Any business partnership reflects on both parties. You should find logistics providers who share your brand values and represent you the way you choose. Consider the provider’s compliance history, financial stability, and dedication to continually improving systems and processes as the market changes.
Third-party logistics providers are intended as long-term partners. You don’t want to have to repeat this process regularly, so partnering with the right one from the start is key to developing a strong and lasting partnership that’s there to support you as your business scales.
Exceptional Service
Logistics partners reflect on your business and have a big impact on the processes and customer service you can provide. Your provider should be as dedicated to success as you are, both with ensuring you provide exceptional customer service to your customers and in the service they provide to you.
For example, if a new solution offers an opportunity for better systems or processes, your logistics partner should be prepared to work with you to find new ways to improve. Not every trend or solution will be the right choice for your business, but an innovative logistics partner will consider the options instead of relying on familiar processes.
Find Your 3PL Partner
With a new logistics company seemingly starting up every day during a market boom, it can be overwhelming to choose the right logistics partner for your business. Not all logistics providers are a good choice for your business or offer the services and capabilities that benefit you, so it’s vital that you take your time evaluating potential partners and looking for the best option for your unique needs. Ideally, you’ll find a partner with an interest in a long-term, successful partnership and continual growth and development.
Article by David L. Buss, CEO of DB Schenker USA
