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6 Questions To Ask 3rd Party Logistics Companies for 2015 and Beyond

3rd Party Logistics Companies

With an ever-increasing pool of third-party logistics (3PL) providers to outsource shipping needs to, understanding how to select the best 3PL is the difference between reaching your existing customers and gaining a new market share. Many different factors have been previously discussed on specific details of selecting a 3PL, but have you truly learned how to identify the top-notch 3rd Party Logistics Companies from the fly-by-night, intermediary 3rd Party Logistics Companies? It’s true: some 3rd Party Logistics Companies exist solely as a conglomeration of intermediaries with connections to the Big 3 Carriers. However, more 3rd Party Logistics Companies are expanding into the realm of putting an emphasis on the supply chain and engagement in the intermediary processes. Fortunately, selecting a 3PL for 2015 and beyond can be broken down into six specific questions.

What Is the Company’s History?

Less than two decades ago, the concept of 3rd Party Logistics Companies were relatively unknown. Trucking companies expanded into providing wholesome solutions for small to mid-sized businesses (SMBs), and shipping intermediaries were trying to make shippers collaborate to move existing shipments towards capacity per haul. Understanding the history behind today’s available 3rd Party Logistics Companies will help you understand how the respective entity became involved in the process. Companies based on assets have had years of experience in purchasing trucks and managing warehouse inventories. Alternatively, intermediary-based, or non-asset 3rd Party Logistics Companies have waged a “near-war” with various carriers to negotiate cheaper rates and more rapid delivery times.

A company’s history also dictates how well the company engages in global trade. This is not meant to sound prejudice, but companies in highly-scrutinized parts of the world understand the role of visibility in modern trade practices. Therefore, they have taken extensive steps to monitor existing shipping practices and maximize their profits. Ultimately, these 3rd Party Logistics Companies may have additional resources in countries around the globe with difficult import and export regulations. However, 3rd Party Logistics Companies with existing multilateral agreements with companies around the globe may also have similar qualifications.

What Data Analytics and Business Process Strategy Services Are Offered?

Shippers report capacity as their top concern for selecting a 3PL service provider, specifically 65 percent of surveyed shippers. Secondly, technology investment comes in as a concern 58 percent of modern shippers. Technology investment does not strictly apply to managed IT services, which are discussed later; it applies to the use of technology to formulate new, more-efficient process strategies. For example, a shipper may want to take advantage of transportation management systems (TMS), which enhance visibility and improve transportation management.

With the rise of the Internet, automation has become something of an expectation for 3rd Party Logistics Companies. Automated processes allow workers, which include managers, loaders, forklift operators, billing professionals, and others, to focus on the goal of the company. Therefore, business processes are streamlined and data analytics creates key performance indicator results, which further promote the respective 3PL and their client-base. This leads one eventual question: what managed IT services are offered by the 3PL?

What Managed IT Services Are Available?

Managed IT services are one of the most commonly misconstrued aspects of a 3PL service provider. Managed IT services refer to the services offered that do not necessarily exist in the physical location of the business. For example, the use of cloud technology to enhance communication with clients and promote up-time for e-commerce traffic fall into the realm of managed IT services. Furthermore, managed IT services may include helpdesk support, technical support, off-site 3-D printing services, and data storage. To help you select a 3PL based on their managed IT services, look for the following:

  • Agreements with data centers for data storage and web hosting capabilities. This helps minimize the middle-man, which translates into savings for the individual  3rd Party Logistics Companies and their clientele, which you will be part of.
  • Live tech support. Nothing gets consumers angrier than an automated, “select-from-the-following-menu” style of customer service. Managed IT services should include optional, live customer support. This is essential to growing your customer base to include those with visual and hearing impairments.
  • Automated processing of claims. Considering return merchandise authorizations and other customer needs, a 3PL should offer an array of reverse logistics and other logistics processes as part of their managed IT services. This is crucial consideration for companies in high tech industries or time-sensitive after sales, such as core returns or remanufacturing.

What Predictive Analytics Are Available?

While on the topic of IT services and analytics, you must consider what predictive analytics are offered and managed by a possible 3PL. The ever-changing demands of the market and consumers result in a forecast for determining inventory needs. This also involves the concept of vendor management. For example, predictive analytics can identify periods of high-volume, and therefore, use this information to improve delivery schedules and enhance routes and order fulfillment processes to make sure the item arrives to consumers on-time. Ultimately, the more predictive analytics a 3PL offers, your responsiveness to consumer demand will be greater and more efficient.

How Does the 3PL Meet E-Commerce Needs?

Where shipping once was considered a hassle for customers ordering products in stores, now stands an entire, ethereal realm of Internet traffic. Purchases made through e-commerce stores do not necessarily need to enter the brick-and-mortar distribution model, and therefore, your consumers should have the option of shipping directly to physical location from you, the original manufacturer. Retail giants, like Walmart, already offers this option, as does some of the other retail giants. However, Walmart has had over 50 years to perfect this process, and a viable 3PL service provider needs to have similar options. More and more, e-commerce is coming to the industrial industries, and shipping involves now the complexity that mode LTL (Less-Than-Truckload) and e-commerce combined. These types of shippers, like tile companies and furniture manufacturers, need good automated tools that integrate into platforms such as TMS in order to get LTL e-commerce shipping as effective as those previously mentioned retailers. 

How Extensive Is Their Network?

The rise of reshoring and the desire for customer closeness has helped transformed shipping ideals and processes due to multiple locations throughout the United States, and often the globe. 3rd Party Logistics Companies have managed to avoid the inherent pitfalls of sending products around the country to multiple locations, with multiple stops and modes, by expanding their existing locations, distribution centers, and shipping networks. Basically, you need to ask how extensive a 3PL provider network is currently. You must think in bigger terms if you plan on opening a store online or perhaps a few new locations. It would counterproductive to select a 3PL that would end up charging more to ship an item as a means of outsourcing to another 3PL. Ask for a map of available shipping locations and how these various destinations could affect the terms of your contract.

By asking these six questions, you can find out the heart of prospective 3rd Party Logistics Companies. You need to where they have been, where and what they do now, and to what limit will they go in the future. Think about their history, their management of business strategy, what IT services are offered, how predictive analytics can help, and where the 3PL can legally operate. This is your personal guide for 2015, but it easily applies to all of the forthcoming negotiations between businesses and 3rd Party Logistics Companies in the future.

Adam Robinson
Adam Robinson oversees the overall marketing strategy for Cerasis including website development, social media and content marketing, trade show marketing, email campaigns, and webinar marketing. Mr. Robinson works with the business development department to create messaging that attracts the right decision makers, gaining inbound leads and increasing brand awareness all while shortening sales cycles, the time it takes to gain sales appointments and set proper sales and execution expectations.
Adam Robinson
Adam Robinson
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