When you’re handing part of your supply chain to a third-party logistics provider, you have to place a lot of trust in that partner. Instead of your in-house team having the final touchpoint with a customer’s ordered product, your 3PL takes on the warehousing, inventory management, and fulfillment responsibilities.
That’s why it’s so important to thoroughly vet any potential logistics partner and put specific criteria in your RFP/bid process. While it’s tempting to evaluate based on price, a cheaper 3PL that delivers poor service to you or your end customers can end up costing you much more than alternatives.
Forbes reports that 97% of consumers say customer service impacts whether or not they stay with a brand, and 81% say a positive experience encourages them to make another purchase.
Those are pretty high stakes for working with the right partner. With that in mind, here are the top five things to look for in your 3PL vetting process:
1. Technology in Use.
Today’s supply chain is complex and can change directions fast. The 3PL provider you choose needs to have the technological capability to adjust to those changes in real time, and to make accurate predictions for future shifts.
Your 3PL should have a robust inventory management system that easily integrates with the systems you already use, such as your ERP. Whether API- or EDI-based, these integrations should provide seamless communication between systems so your fulfillment process doesn’t get bogged down in manual data entry processes.
Another key ingredient to a successful tech stack is end-customer communication. Consumers aren’t content anymore to place an order and just blindly wait for it to show up – they want status updates, shipping notifications and tracking. If your 3PL can’t provide that information, you could lose out on sales.
2. Data Management and Security.
Businesses run on data. How your 3PL manages, processes and secures your business data is a critical consideration.
Even something as simple as a mistake in a customer’s address can lead to an unhappy customer who refuses to order from you again because their product was delayed or didn’t arrive. And problems can be even more serious if your 3PL doesn’t have rigorous enough data security in place.
The average cost of a data breach in the U.S. is more than $9 million – and while your own security might be top-notch, it only takes one weak spot to let bad actors through. Protect yourself by ensuring all of your third-party partners, including any potential 3PL you work with, have proven data security measures in place.
3. Capacity and Scalability.
Choosing a too-small 3PL for your business’s order volume is like trying to go down a shoe size – it’s always going to be too tight and uncomfortably cumbersome to move in.
If your business operates nationally and you don’t want a piecemeal network of providers in different areas, you need to look for a 3PL with a country-wide footprint. Even if you currently operate in a specific region, if you have any plans for expansion you’re better off choosing a 3PL with the capability to handle your volume as you grow.
Look for a 3PL partner with warehouses in or near regions you operate in, with the capacity to handle your inventory even during peak seasons. The last thing you want is to forecast a major surge in demand, but find yourself out of room at your partner’s warehouse to handle it.
4. Industry Knowledge.
Not just logistics knowledge – that should be a given for a 3PL. What you want to know is, does this 3PL have expertise in your industry? Have they experienced peak seasons for your type of business? Are you in a business sector like apparel or electronics with either high-volume or specialized return requirements?
A list of services your 3PL offers is great, but if they don’t have experience in your industry and are unable to handle either fulfillment or returns during high-volume periods, those services won’t be a great benefit for you.
5. Customer Service.
As mentioned at the beginning of this article, your 3PL partner is often the last experience your customer has with their order from you. Your website may be user-friendly, the checkout process may be the best ever, but if your customer doesn’t receive their product on time and in good condition, you may lose them forever.
Look for a 3PL as dedicated as you are to providing your customers a great purchase experience, from “add to cart” all the way through “delivered.” Much of this goes back to the technology section and sharing data between your systems so your customer service staff can answer customer queries – but a lot of it also lies in your 3PL team’s dedication to efficient and accurate picking, packing, and shipping.
Partnering with the right 3PL can take much of the fulfillment burden off your internal team – but partnering with the wrong provider can cause more headaches than it’s meant to solve. By using the above criteria, you can get a better sense of a potential 3PL partner’s compatibility with your business and avoid breakdowns
Ryan Transportation is the Right 3PL for Your Business
Ryan Transportation knows a thing or two about what it takes to be a great 3PL. Since Ryan Transportation was founded over 35 years ago, we have grown consistently year after year, developing into a family of brands in transportation services, finance and technology. Our network has expanded to over 90,000 carriers across all modes and equipment types, ready to move freight throughout all of North America 24/7. Internally, our support teams have grown to more than 550 logistics professionals dedicated to serving you.
Contact us today to experience the difference that choosing a 3PL like Ryan Transportation can make for your business.