In choosing a 3PL provider, there are essential factors that will come into play in the decision-making process. Although the 3PL option is not intended for everyone, e-commerce businesses that consider it can benefit from the service by making the delivery process more efficient. As there are hundreds of providers for you to choose from, considering these factors will help you narrow down your selection.
Choosing the perfect match
You need to be aware of each provider’s core competencies so you can determine if they can meet your business requirements. The factors to keep in mind are fulfillment scalability and flexibility, value-added services, system functionality, strengths in B2C or B2B fulfillment and many others. Prior to searching for a 3PL provider, be sure to define your business requirements.
Comparing operational costs
A provider needs to supply you with enough details which should be accurate so you will know if its services match your needs. When it comes to your internal fulfillment, it is important that you are aware of your current costs. The costs should include the total occupancy, packing materials, direct and indirect labor, fulfillment management, IT processing and outbound shipping. These factors allow you to compare apples to apples.
Determine inbound or outbound transportation
Find out if the proximity of your provider’s facilities will reduce the time it takes in transporting goods or if it helps you to save on overall service costs. When it comes to outbound transportation, find out if the provider can help improve your service level. The savings you make will also be factored in.
Avoiding expensive service costs
In keeping the process as efficient as possible, you will need to make a major investment that can cost millions of dollars. When partnering with a 3PL provider, you also have to determine if it can dramatically reduce the amount of money you need to spend in improving the overall process of your business.
Request references
You will also have to know more about the reputation of your prospective provider and you can do this by checking their references. Do they have a proven track record? Do you know about their business size, growth projections, and list of loyal clients? These are important details that will guide you into choosing the right provider for your business.
Site visits
Once you have come up with your prospective provider you will be working with in the future, schedule site visits so you will have an idea about the actual operation. Allow your team members to observe the process. They are going to be your key to determining if you have chosen the provider that suits your needs.
While 3PL may not match everyone’s needs, it can be considered as an effective strategy that can make your daily operation more efficient by improving your service level and giving more room for your business to grow.