8. Certify that your 3PL is managing cost fairly. Make sure you have a comprehensive understanding of how the pricing with your potential 3PL will unfold, advises Bostick. “Certify that the price they quote you is truly the price you are getting on your invoicing.”
Also assure that the program you are building with your 3PL is one in which the 3PL has ‘skin in the game,’ adds Allen. “By that I mean that the 3PL should be held accountable for long-term supply chain savings for your company by managing cost within their operation so they can pass along savings to you.”
9. Make sure your provider has the proper liability coverage. Check potential carriers’ insurance to assure they have the proper qualifications to haul your freight, suggests Moran. “The DOT provides ratings on carriers that are either satisfactory, unsatisfactory, or conditional. Make sure your carrier has a ‘satisfactory’ rating.”
10. Check references and claims history. “Ask your potential 3PL to provide you with a contact list of customers whose businesses are similar to yours,” Allen says. “I suggest that companies get specifics regarding the daily operational functions and how the 3PL’s available technology fits in with their own in-house daily functions. Ask contacts about the quality of the 3PL’s KPI generation, their service standards and their service levels.”
The most effective way to discover the quality of a 3PL’s existing reputation with its customers is to ask for case studies and references, suggests Moran at Sataria.
“For instance, I always make it a habit to ask my carriers what was the worst customer experience they ever had and how they handled it. You can also ask for a company’s claims history to understand the level and quality of their service. Keep in mind, though, that it is inherent in this business of moving food products that there will be claims such as damaged cases and charge-backs,” says Moran. “But this doesn’t mean that you automatically disqualify a provider because they had claims. The key is to discover how the company dealt with the claims issues and if they managed the process professionally while protecting their customers throughout the process.”
Keeping it Alive
Once you have chosen what you have determined to be the perfect 3PL fit for your operation, make sure you maintain it over time. Experts agree that communication between a food shipper and its 3PL is a top priority to maintaining a close, successful, and long-term partnership.
“There should always be a set of KPIs established between the partners that drive communication,” advises Moran. “There should be a predetermined period of time—maybe every month—when the partners get together to discuss KPI results. For instance, the partners might discuss how they initially targeted a 99.9-percent on-time delivery goal and if the 3PL achieved that goal. It is critical that the shipper is comfortable in receiving the data they need in order for them to truly know that they are getting what they expect and what they paid for.”