The ideal partnership between a shipper and its 3PL rests on a foundation of mutual trust through periodic communication. “When I pick up the phone to call Sataria, there is always someone there to answer my call; when there isn’t, they get back to me within 30 minutes, which for us could be the difference of having a truck or not having one available to deliver our products when our customers need them,” Rhodes says.
The Do List
Companies contemplating moving their logistics and transportation functions to a 3PL might easily be overwhelmed at the prospect of beginning the quest for a 3PL. What questions should you ask and how many prospective 3PLs should you solicit in order to have enough information to help you choose just the right 3PL for your needs?
Robert Russo of Port Jersey Logistics suggests comparing the functions of about three companies. “Some smaller companies I have worked with do one of two things when they start looking for a 3PL,” says Russo, president of the Monroe, NJ-based company. “They go to everyone in the market they can think of and it gets so overwhelming for them as they try to compare service, quality and price. Or they go to just one or two and discover they don’t have enough information to make a true comparison that will help them make the right decision.”
According to the experts we interviewed, the following are some of the top metrics to use as you collect information to help you develop your comparison of providers.
1. Know what your needs are. You might want to work with a 3PL with more capital if you are a large shipper with lots of shipments leaving many of your facilities, notes Bob Moran, CEO of Indianapolis, IN-based Sataria Group. “Having more capital to work with, the 3PL could set up more dedicated systems for you and do custom software development. It is very important for you to know what the tasks are for your provider so the 3PL you choose will be able to perform those tasks.”
The main goal in a 3PL partnership is built on collaboration, says Charles Bostick, director of operations and transportation for Vantix in Carrollton, TX. “You want to make sure there is a mutual understanding on the part of each party so each understands the business model of the other,” Bostick suggests. “We and our customers need to agree what requirements need to be met and how we, as a team, can achieve those goals. We both need to be confident that together we will achieve the long-term goals established by our customers.”
Russo says companies need to know what their expectations are of the 3PL they are evaluating. “For instance, go to the 3PL prepared with data such as your transaction volumes and what your systems capabilities are for interacting with a potential 3PL. The 3PL should understand the nature of your business and the role you expect them to play. It helps if you can anticipate how well you both can work together. After all, we at Port Jersey are here to meet and satisfy our customers’ requirements.”
2. Consider choosing a 3PL with a similar culture to yours. “I think the playing field for providers is relatively level, with technology allowing a smaller logistics company to compete pretty much head-to-head with a larger logistics company,” notes Moran. “For instance, if you are a small ethnic frozen entrée manufacturer using small, third-party carriers, chances are you will mean a lot to each other. But if you are that same manufacturer giving only two pallets of product a week to a monolithic carrier, chances are good they will take care of their bigger customers before you. So matching up with someone who has a similar culture to your company is quite critical.”
3. Say ‘no’ to cookie-cutter solutions. Russo suggests finding a 3PL who understands the unique logistics needs of each client. “Align yourself with a partner who provides flexible solutions and takes a tailored approach to suit your specific situation,” he says. “Ask potential 3PLs for examples of customers with similar organizations to yours, and how they provided customized solutions for those customers.”
4. Certify that your 3PL can handle emergencies and exceptions effectively. For Amelia Bay, choosing a 3PL who can handle exceptions effectively and as quickly as possible was a top priority. “When we have an urgent shipment, Sataria does whatever it can to meet our needs,” reports Rhodes. “For example, we might have a client who wants their shipment bumped up by a few days. Sataria will do everything it can to get us a truck so we can meet those urgent needs of our client.”