Within 2020, logistics the world over are expected to hit magnanimous levels. The growth of entrepreneurship along with exciting start-up initiatives is expected to bring in new business opportunities and generate significant logistics requirements.
Organizations both large and small now find supply chain management to be a key pillar of their business. Many have taken to outsourcing 3PL activities owing to the lack of resource, funds, or experience. Contracting the services of a 3PL is a long-term decision that should be made only after careful review and analysis. Here are the top dos and don’ts when hiring a 3PL.
- Define KPIs
As a retailer, perhaps your policies boast of one-day deliveries but if your provider considers a two-day delivery as the standard, then a serious problem persists. Hence, it’s wise to discuss and establish certain benchmarks before you begin your collaboration with a third-party logistics provider. This way, both parties are made aware of each other’s expectations. It also offers an index based on which the logistics provider’s service levels and performance can be accessed.
- Vet the 3PL
With the changing purchase trends, an effective supply chain is not an added advantage that companies can boast of. Rather, it has become an obvious requirement just as customer care or warranty services are. As such, it is important to select your third-party provider with caution. Take the time out to thoroughly vet various supply chain providers. Consider their past and present performance, success rates, clientele, areas of expertise, and other relevant factors before making a decision. It’s important to get this right!
- Maintain transparency
It’s vital to keep a track of your third-party provider’s performance. Developing a transparent system is a good start. Set up a common software that will have your team informed of unprecedented and conventional changes. Let your 3PL know that your team will expect monthly reports on the number of orders completed, the number of vehicles/fleets dedicated to your company, use of additional resources etc. This helps in controlling costs and ensures a more efficient partnership.
- Consider small market players
It’s easy and convenient to shortlist well-established 3PLs. However, these services could come at a hefty price tag given the brand value. If your supply chain requirements are limited to a limited territory or within the country, it makes sense to also consider small and upcoming 3PLs. This will help you receive dedicated services and occasionally, even a good discount.
- Rush into it
Outsourcing is being dependant on your provider to offer the best possible service to customers. In other words, your 3PL plays a substantial role in defining your brand. Hence, it is important to carefully assess various service providers before choosing one. Spend time studying prospective 3PLs and encourage them to understand your brand, it’s work culture, work ethics, etc. Ensure that they meet the organization’s benchmarks in terms of safety, timeliness, scalability, flexibility, and other such factors.
- Source to multiple vendors
Each 3PL may be well-known for a few offerings. While one may have an international presence that’s spread to the nth country, another may boast on grounds of the shortest delivery cycle. But it doesn’t help to outsource to multiple 3PLs at a time. This will lead to complications and increased costs. It is advisable to find a single provider who can take care of all your supply chain requirements. This also allows a single-point of contact to take care of all your queries and complaint redressal.
- Decide based on price alone
Price can be a key deciding factor when it comes to choosing a 3PL. But the lowest price tag does not mean the best of services. While factoring in a feasible price is important, it is ill-advised to select a 3PL based on it solely. For all you know, the organization might suddenly find its brand image tainted and top-notch customers calling in for a slew of complaints.
- Compromise on quality of services
Make sure that the third-party logistics provider understands the nature of your business, including its strong points, customer service policies, and the like. It also helps to create a method that’ll allow your team to evaluate service levels. Dedicate resources to address weekly/monthly performance. Even if it means a bigger chunk of the wallet, an organization simply cannot overlook its quality levels.