Businesses thrive on networks and inter connections. You have suppliers, vendors and logistics partners you rely on to make the business work. Whatever business you run, you will always depend on another business; especially with logistics because most businesses need logistical assistance.
When you sign up with the shipping carriers such as FedEx/DHL/UPS to deliver your shipments from one place to another, they become your 3PL partner. Choosing your partner is very important for the smooth functioning of your business. In order to ensure this, it is better to have a check list when you consider a 3PL (3rd party logistics partner).
How should I choose a 3PL?
Before you start off, understand your own requirements. So, start with a checklist there. Once you zero in on contenders from this narrowed down list, check for.
1. Process for interfacing with the 3PL:
When you liaise with another business, you need some channel to do so. Small businesses who opt for 3PLs have problems with the processes. Sometimes, the partner does not have clearly defined processes in the first place. They need to know what is expected in your orders.
2. Upper threshold on number of 3PLs:
Too many business partners can and will spoil your broth. Consider a maximum of three 3PLs. That’s what business experts say. Periodically, analyse what good or bad your 3PL does to your business. And keep on looking out for 3PL assistance options that can optimise your processes and costs.
3. Don’t use an RFP:
A Request for Proposal limits you to functional costs. That’s not a good idea. A fruitful 3PL relationship should result in a quantifiable value significantly more than any RFP can identify. Select to partner with a 3PL that offers the clearest quantitative value to your business.
4. Have an internal 3PL evaluation team:
Put together a team that has representation from the supply chain/logistics, information technology, sales/marketing, purchasing, and finance departments. make sure you include people from all parts of your supply chain. This gives you the advantage of having a wide approval for your 3PL. Moreover, this team gives you valuable feedback that can help you decide better from all their perspectives.
5. Create an enforceable, mutual non-disclosure agreement:
Legalities come first. If you are a big organization, ask your legal team. Else, ask an external legal expert. Initiate this before formal meetings with the 3PL. your legal team should help you create an agreement that is beneficial to your business while liaising with the 3PL logistics provider.
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