Effective fulfillment service is an ideal solution for all types of businesses you can’t live without. Outsourcing ecommerce warehousing to 3PL (third party logistics provider) comes with many benefits that make your tasks quicker, cheaper and more efficient.
It’s important to evaluate fulfillment services in what they offer and what your business needs. You need to hire a 3PL provider that does all the necessary operational tasks like maintaining equipment, keeping track of pallets and much more.
Finding a perfect 3PL Provider that meet all your business solutions is a lot harder.
A research study from the State of Logistics Outsourcing study shows that:
- 3PLs have a 23% average fixed logistics cost reduction
- Shippers report an average logistics cost reduction of 11%
- 3PLs have a 6% average inventory cost reduction
- Shippers and 3PLs are about equally satisfied (70% and 69%, respectively).
There are many considerations to draw from the above data. Like, how does a 3PL manage reduction costs to make their operations more cheap and efficient? The reality lies in the utilization of storage, provision of cheap transport and effective handling of needs/solutions on behalf of their client businesses.
Each company has different business fulfillment needs. 3PL companies use sophisticated warehousing management software to manage, plan and distribute products depending on their client company needs. And in such, committing to a 3PL isn’t something to take lightly. Most contracts taken by 3PL warehousing are performed on a long-term basis and it has to fit well with your business growth plans, operations as well as your customer service relations.
So what are you looking for in a 3PL warehouse company?
We’re going to discuss the most important factors to consider before engaging business with them. Be sure to look for a third-party logistics that’s both a solution provider and an advisor that you can trust by understanding all of your present and future fulfillment needs. These needs can be hard to make if you’re new to the industry. That’s why we’ve come up with short but helpful considerations you must take into considerations before engaging business with any 3PL warehouse company.
1: 3PL’s Level of Technological Sophistication.
Every business strives to keep pace with the rapid advancement occurring in the technology industry.
A lot of processes occurs in the warehousing management software systems as it tries to share information across its customers. A lot of net revenue percentage goes to the investment in technology like developing and implementing new applications for all technical and customer solutions.
With that said, you should make sure to check if the level of the 3PL’s system is able to integrate with your own business automation needs including CRM requirements.
2: Financial Strength of the 3PL
Most 3PL engagements are long-term and you don’t want to devour your business success with 3PL financial instability. 3PL companies are capital-intensive businesses. They should have adequate financial resources to invest in their clients.
When measuring the strength of the 3PL financial stability, look at the following questions and find the solutions from the third-party logistics that satisfy your business needs.
- Is the 3PL you choose able to provide the services you need as a client?
- Are they able to take advantage of the powerful innovations that have the ability to both protect and advanced your business?
- Are they able to cope with any economical or natural disruptions?
- Are they willing to provide you with their profit and loss data for the past few years to help you analyze any trends that will help you draw decisions based on your business needs?
- Are they able to show ongoing cost and process improvements? There are many other considerations to check financially before engaging any business with them.
3: 3PL’s Talent (Their Knowledge and Expertise)
There are many challenges facing both 3PLs and their clients especially in supply chain and logistics competence. As a client looking to establish a successful business, you’ll need to consider the overall breadth and depth of experience with the 3PL company and its staff. Look for both the positive and negative side of the 3PL you choose as all these talents have a significant impact on your business progression.
4: 3PL Flexibility and Scalability
Can the 3PL you choose incline their base with your business growth? There are many considerations the 3PL must be able to meet the requirements your business needs to help foster a continuous growth of your business, especially new markets.
Your 3PL choice should be able to manage stock rotation parameters effectively as well as other warehouse metrics that matter most to your needs.
5: Advanced Business Intelligence and Solutions
This is mostly based on the level of IT solutions including networking and knowledge- exchange opportunities. Serious third-party logistics providers should conduct market research and share its findings and insights with their clients. Also, they should be able to cope with any business challenges and provide a robust solution to their clients.
There are other factors you should put into considerations when selecting the best 3PL provider that match your business needs and goals. Before engaging any relations with a 3PL provider, be sure to vet consistently the company’s way of work (management), IT, customer relation and financial preparedness among other factors.