Third party logistic companies known as “3PLs” provide transportation outsourcing services, including warehousing and transportation management, as well as global logistics solutions. 3PL relationships play an essential part in both a company’s operations and their supply chain. Companies searching for operational efficiencies that can lead to lower transportation costs and a healthier bottom line should work at building an effective 3PL relationship. This can significantly impact the growth and success of a company, while expanding logistics capabilities. The 3PL selection and evaluation process is crucial to achieving a valuable partnership, matching the 3PL’s core values with the company’s needs, creating a source of competitive advantage.
What 3PLs Should Be Doing
As technology continues to evolve, and e-commerce continues to grow, businesses in all industries have the ability to be more demanding and selective with their logistics partner. Therefore, 3PL companies are forced to adapt quickly and proactively seek ways to service customers more efficiently, taking an innovative approach, and providing value added services that separates them from the competitors.
As part of developing long term relationships, 3PLs should invest in the training, leadership support, industry expertise, and development of their people. 3PLs that know their staff, their values, working capabilities and strengths, are able to do a better match up of the staff with clients, and establish more meaningful and dynamic partnerships. A 3PL that pushes their staff to nurture client relationships, proactively suggests new procedures/strategies, provides industry benchmark analysis, and presents performance metric analytics, clearly demonstrates a greater commitment to clients and their business.
KPIs are very valuable for a business, as it outlines their strengths as well as areas of improvement which helps a company to measure their success at reaching desired targets. 3PLs who actively provide this type of data can further differentiate themselves from their competitors.
What to Look for in a 3PL Partner
3PLs tend to have a wide range of services, and consumers should evaluate, and truly understand how the relationship aligns with their business needs. The key identifiers of a valuable 3PL partnership include a combination of a trusting relationship, strategic planning and availability of technologies and tools that can elevate businesses to the next level and promote overall growth.
Operational efficiencies can be obtained when a logistics network is available, that can allow utilization of shared assets and operational costs provided by the right 3PL partner. 3PLs that provide a full service approach, and bring value added components as part of their core services will have a greater impact on your business’s overall operations and future success. As a complement to the basic trucking and warehousing services, these provide a more streamlined process when transporting and storing goods. Some of the value added services on offer include, cargo consolidation, full truckload (TL) and less than truckload (LTL) shipments (allowing more frequent and flexible delivery schedules), multi-modal transportation, multi-location distribution and warehouse storage capabilities, multi pick and drop capabilities, specialty packaging, labeling, customs brokerage, reverse logistics, and last mile deliveries. The overall services and competencies that a 3PL can provide, allows a business to leverage the 3PL’s expertise and resources, and lower operational business risk while reducing operational costs. Therefore, choosing the right partner is essential to all businesses.
Transportation optimization through greater visibility and technological innovation allows logistics companies to enhance utilization of assets, more efficiently plan when setting up routes, minimize miles, reduce fuel costs, better utilize and allocate drivers, and reduce empty miles, as well as better track shipments, automate lot control, cold chain operations, and data mine. 3PLs who use transportation and warehousing management systems (TMS, WMS) allow them to be more responsive to changes, by having a more integrated and simplified approach that reduces manual processes, and enhances the way the 3PL delivers services to their customers. Having a 3PL that has not simplified and facilitated their services through technological advances is a major limitation/weakness. Businesses should look for continuous improvement, choosing a 3PL that shares the same value.
The partnership between a business and their 3PL impacts the supply chain in many ways. Finding the right partnership will strengthen the business’s KPIs, and allow the business to focus on other strategic areas.
Contact us to find out how Mazars USA LLP can help you venture further with your 3PL and supply chain.