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Doing Your Due Diligence With 3PL Providers

When it comes time to hunt for a new 3rd party logistics partner, what isn’t stated explicitly can never be assumed to be one way or another.

Like in any business relationship, you have to do your due diligence to ensure you’re getting what you think you’re paying for. You don’t want to leave any questions for later when you’re trying to form a new 3PL partnership because the decisions you make today can affect your business for years if your choice of fulfillment service can’t deliver.

Questions to Ask Your 3PL Today

Before you sign with a fulfillment house, you should be absolutely certain you know what you’re getting for how much money. In fulfillment, there’s plenty of tricky terrain to navigate, but if you ask these questions, they’ll help you find the right path:

  • How can you help me save money? You should never go with budget rate 3PLs simply because they’re budget rate, that can actually end up costing you more when you discover they have no room for your shipments or continually bump you for customers who are paying more.Instead, ask them how they can save you money over your current provider. You may discover that by paying a little more, the value you get results in enough increased revenue per unit that it results in a net savings over the budget guys.
  • How can you help us do a better job logistically? You know that late shipments and inaccurate order fulfillment results in angry customers who tell their friends, but that’s only one way that a bad logistics company can hurt you.Asking a prospective 3PL how they can help improve your operation opens up discussions about advanced software, Big Data, transportation partnerships and even warehouse efficiencies. These are all areas you want to discuss before making a commitment.
  • Do you cater to other businesses like mine? Not every fulfillment service is the same, and that’s ok, some specialize in moving auto parts while others might move frozen fish food. If you’re in the fish food business and your new 3PL doesn’t have the facilities to keep everything cool, however, you’ve got a big problem. Even in less extreme cases, like companies that sell perishable cosmetics, you need to know that your 3PL understands everything it takes to manage your warehouse.Whether your inventory requires special rotation by lot to prevent expiration or you simply have a lot of SKUs for tiny things, it’s important that your new 3PL fully realizes what you require to function as a company.

It’s important that you spell out exactly what you need, and figure out exactly what you’re getting, when meeting with a new 3rd party logistics company. The more you know and the better your communication upfront, the more likely you are to be happy with your 3PL over the long-term.

May 16, 2017
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