In today’s modern business world, there is an ever-increasing need to outsource specific tasks and functions to remain competitive. One area that has seen a lot of growth in recent years is third-party logistics (3PL). But what exactly do third-party companies do, and how can you choose the right partner for your business?
In this article, we’ll take a closer look at why businesses would want to outsource their logistics needs, the types of 3PL providers available, and what to look for when choosing the right partner.
What is a Third-Party Logistics (3PL) Partner?
A third-party logistics provider is a company that offers outsourced logistics services to other businesses. These services include transportation and warehousing to packaging and order fulfillment. There are many different types of 3PL providers, each with a unique set of services. For example, some 3PLs may focus mainly on transportation, while others offer a more comprehensive suite of services.
In any event, the main goal of a 3PL provider is to take on the logistics tasks of their clients so that those businesses can focus on more important things, like running and growing their core operations.
Understanding the Different Types of 3PL Partnerships
Before deciding how to choose a 3PL provider, it’s essential to understand the types of partnerships available.
The most basic type of partnership is what’s known as non-asset-based logistics. The 3PL provider does not own warehouses or vehicles in this arrangement. Instead, they act as a middleman, connecting businesses with the necessary resources to get their products shipped. This arrangement is typically used for companies that don’t have the volume to justify owning their transportation assets.
The next step up is an asset-based partnership. In this arrangement, the 3PL provider owns warehouses and transportation vehicles. This gives them more control over the logistics process and allows them to offer a more comprehensive suite of services. Asset-based partnerships are typically used by businesses that have a larger volume of shipments or more complex logistics needs.
The most advanced type of partnership is known as a lead logistics provider (LLP). In this arrangement, the 3PL provider takes on the role of lead coordinator for all of the client’s logistics needs. This means they are responsible for managing all aspects of the client’s supply chain, including transportation, warehousing, order fulfillment, and more. LLPs are typically used by businesses with very large or complex logistics needs.
How to Choose the Right 3PL Partner for Your Business
Choosing the right 3PL partner is a critical decision for any business. After all, this company will be responsible for shipping your products and keeping your customers happy. So how do you choose the right provider? Here are a few things to look for:
- Services Offered: As we mentioned, there are many different types of 3PL providers, each with its unique set of services. When choosing a provider, it’s essential to identify your specific needs and find a provider that offers the services you need.
- Industry Experience: Another critical thing to look for is industry experience. Choosing a 3PL provider with experience working with businesses in your industry is always best. They will be familiar with your industry’s unique challenges and requirements and be better equipped to meet your needs.
- Transportation Assets: If you’re looking for an asset-based partnership, it’s essential to check out the transportation assets of the 3PL provider. Do they have warehouses and transportation vehicles? Do they have the necessary resources to handle your shipping volume?
- Flexibility: Flexibility is vital in any business relationship, but it’s crucial when choosing a 3PL provider. Your business will inevitably go through ups and downs, and you need a partner that will be able to adapt to those changes. In addition, look for a provider willing to tailor their services to meet your needs.
- Technology: Technology is increasingly vital in logistics, and choosing a 3PL provider that keeps up with the latest trends is essential. Look for a provider that uses cutting-edge technology to streamline operations and provide their clients real-time visibility into the shipping process.
- Customer Service: Last but not least, choosing a 3PL provider that offers excellent customer service is important. Remember, this is a company that you will be relying on to keep your customers happy. So be sure to choose a provider with a track record of delivering excellent customer service.
Picking the right 3PL partner is a critical decision for any business. Whether you’re a small business just starting or a large corporation with complex shipping needs, it’s important to find a provider to meet your specific requirements. By using the tips in this guide, you can be sure to find the right provider for your business.
Bill Heaney is the CCO of DB Schenker USA, a 150 year old leading global freight forwarder and 3PL provider. Bill Heaney is responsible for all commercial strategy and activities in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.