What to Look For in Third-Party Logistics Service Providers

The field of third party logistics service providers has grown fiercely competitive.

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The field of third party logistics service providers has grown fiercely competitive. Some experts suggest the number of 3PLs is actually shrinking as logistics service providers themselves grow in size. At the same time businesses look to consolidate their outsourced supply chain functions down to one or two core providers. Though all logistics providers hone in and leverage their own set of qualifications and specialties to compete for your business; the resulting playing field is a level one, where the services and capabilities a logistics service provider can offer become difficult to differentiate.

So with more specialized 3PLs emerging, a business looking to outsource part or all of its logistics to a third party should consider a variety of factors to identify a logistics provider that is part tactical service provider and part strategic business partner.

Consider the following when searching for your ideal dedicated logistics partner:

Does the Logistics Service Provider’s Culture Match My Business’ Culture?

One of the first things you should look for in a logistics service provider is one that shares similar core values and culture. Does the provider list their core values on their website? Hopefully. You want one that not only talks about their core values, but also proves that they can drive results by aligning these core values to successfully develop their own culture — which then drives value into their client relationships.

Knowing that the 3PL you’ve contracted with has similar goals and values related to integrity, efficiency, leadership and community consciousness is the first step towards a successful third party logistics service provider relationship. With labor costs accounting for around two-thirds of the total cost of a distribution operation, the people are the biggest opportunity for success. A provider who values their human capital over their infrastructure will be a stronger partner to align with to drive value into a supply chain.

Does the Logistics Service Provider Have a Good Track Record?

As with any partnership, it’s important to know that the logistics service provider you’re joining forces with has a good track record — in terms of customer service, accountability and financial health.

Be sure to research all logistics service providers for testimonials and contact them to ask for applicable references. Pay particular attention to whether they are capable of providing business solutions that solve for current and future business needs. And look for any recent awards or recognitions that prove that they are going above and beyond in their industry.

Is the Logistics Service Provider Familiar with My Business?

Familiarity with the region in which your business operates is vital, particularly when handling your transportation — locally, throughout North America, or internationally. A logistics provider should know what’s going on at the ports, on the roads, and at the borders. Make sure that any logistics service provider you consider has the expertise for accurate forecasting and risk mitigation.

Familiarity with your industry may be the most important box to check in your search for a trusted 3PL warehousing and distribution partner. A high-volume, highly seasonal and volatile retail environment has different needs and nuances than does an industry such as industrial parts manufacturing. Knowing how to be proactive and resourceful within these environments is a key characteristic of a third party logistics provider that is a fit for your business.

Does the Logistics Service Provider Commit to Technology?

While it used to be a selling point of select 3PLs, Tier 1 Technology is now an industry standard. Having the platform is one thing, investing in the people to use it to drive value and scalability into a business’s operation is entirely another. Not all businesses can allocate the capital needed to invest in Tier 1 Technology, nor can they invest in the expertise to use it — but those are now minimum requirements for a leading global logistics service provider.

When tracking location, timeline and inventory for hundreds or thousands of clients around the globe, 24/7 real-time tracking capabilities are a necessity. Make sure your logistics service provider is equipped with the technology to forecast, plan, provide visibility, integrate, automate and drive efficiency into your business.

Is the Logistics Service Provider Willing to Invest in Growing my Business?

A proactive logistics service provider will be interested in more than meeting your annual budgets, quotas and KPIs. Today it’s about aligning infrastructure including systems, people, real estate and other assets — to help scale your business. It’s about engineering better methods to continually increase efficiency in an operation. It’s about integrating technology up and down the supply chain to streamline processes and be prepared for unforeseen supply chain disruption.