Logistics forms the backbone of many businesses. And when the business goes global, a seamless supply chain is of utmost importance. Logistics requires vendor choices and other dynamic variables and this makes the outsourced 3PL decision-making process very critical.
What goes into the decision-making process in selecting a 3PL provider?
Alignment of duties and responsibilities
The biggest obstacle businesses face with shipping is to do with controlling the visibility of an international supply chain, lead times, and total landed costs – including inventory carrying costs, obsolescence costs, and customer service. So, a shipper needs a third party logistics provider to meet specific needs, culturally and operationally. The shipper and the logistics partner need to share the same values, ethics and responsibility. Both parties should be willing to resolve issues that crop up. a blame game between partners can turn ugly and disruptive.
Infrastructure
The shipper and logistics partner need to share data on shipment. So, it’s critical that both parties have technological infrastructure to share information globally. They need common capabilities and resources for the 3PL to deliver good supply chain visibility. So, you need to look for a partner with the right infrastructure: regional offices and liaison places in regions you work in for example are signs of good infrastructure.
IT capabilities and compatibility
A3PL needs to share real-time data. It needs to exhibit timely responsiveness to form a seamless supply chain. IT compatibility is crucial for providing global logistics services like shipment documentation, purchase order visibility, cross-docking support, forecasting, inventory replenishment, and life cycle management. Before you look at the compatibility issue, look at your technical capabilities. Step up in case it’s necessary for an efficient system.
Ease of doing business
A deal is possible when two people meet mid-way. There needs to be flexibility in the partnership. There will be exceptions in scheduling and services. The partner should be willing to handle emergencies. After all, a chain is only as strong as its weakest link. Several partners offer value-added services in their bouquet. A detailed analysis of these services along with their historical performance will give you a good idea of what to expect out of the alliance.
Cost
Of course, cost is an important factor in choosing a 3PL provider. Effective and competitive pricing is what a shipper looks for in a 3PL provider. Like with every business decision, cost quote is a deal maker or deal breaker.
