Pinching Pennies While Procuring 3PL Space: Beware of 3 Pitfalls
By James (Jay) Rigelsky on Mar 20, 2018
Imagine that an opportunity to expand your business and grow revenues presents itself, but you don’t have the required personnel or the proper supply chain support in place to effectively implement the new growth strategy. You arrange for a strategic planning meeting and determine the most economically feasible and swiftest route to market strategy is to utilize a Third Party Warehousing company. 3PL companies are considered a value add supply chain opportunity tool, but only if you properly perform your due diligence to choose a 3PL partner that can justly manage your new supply chain.
3PL companies are largely essential for companies trying to improve omni channel and brick and mortar strategies. The right 3PL company is key to improving customer fulfillment properly in the most efficient manner possible, while rapidly growing revenues.
Pay attention to:
1. Competence and Quality: Far too often, companies look to hire 3PLs to improve product delivery methods and customer service, but short-circuit their effort when they hire the least expensive provider. Remember, the goal here is:
- Increase profits
- improve customer service
- Grow revenues.
When procuring a 3PL provider, you must remember all the stages of the product’s timeline from your company and your providers, to your customer’s front door, or shopping cart. Competence and Quality Customer Service are important value adds to remember when choosing a 3PL, select the most cost-effective 3PL provider – not the cheapest.
2. Reliability: As previously discussed, the 3PL you partner with is the last product stage from your company to your customer. Your product quality, value, and reliability may be off the charts, but if your product arrives late, in a tattered box, or every company’s nightmare, inoperable, that is – at many times – the first and only impression of your company. It is imperative you choose a trustworthy 3PL provider that understands your company’s logistic challenges, but respects and protects your brand reputation. Investigate their success rate, customer service rating, and ensure their company values and commitment to success closely mirror yours.
3. Technology: “Technology” is a long word, yet it has already moved ahead in the time it took me to type this The point is to make sure your 3PL provider operates with up-to-date IT equipment and systems and has an implementable and realistic software and technology improvement strategy.
Here’s a list of questions you should ask regarding their tech capabilities:
- Does the 3PL utilize fleet tracking software?
- When was the last time they updated their customer and product portal?
- How often do they update their technology systems?
- When was the last time they experienced a major software or product tracking concern?
- What was their response time, and how quickly was the concern corrected?
Remember this: 3PLs are not cheap, and cheap 3PLs are not always good…
Be mindful of your customer service pledge when partnering with a third party warehousing company.
If you need assistance evaluating third party warehousing providers and obtaining pricing, please schedule a consultation or send us an email outlining your requirement.