The use of third-party logistics companies (also knowns as 3PLs) has grown in pace with the ecommerce and outsourcing boom of the past few decades. Today, it’s rare to find any large company that still handles its major logistics functions in-house.
Even smaller businesses are taking notice of this particular practice. It’s now less common for new startups to even consider building an in-house logistics capability. When it comes to logistics operations, 3PLs are almost always more affordable, more accurate, and much faster than most internal logistics teams.
However, not all logistics service companies are equal. Here’s how you can form stable partnerships with 3PL companies you can trust:
1.) Demand transparency
Most of the problems that come with 3PLs stem from either a lack of clear communication or dishonesty. Many 3PLs do not fully disclose their use of subcontractors or the full extent of their handling processes. While this may enable a 3PL to keep their rates low, this can erode trust not just in the provider but in your company as well.
By demanding transparency and setting the right expectations, you can ensure that you know everything that goes on in the supply chain. This can reduce the risk that you might become blindsided due to a mistake by the 3PL or their subcontractor.
2.) Agree on the risk-sharing
When a 3PL company works on your behalf, they become direct representatives of your business. This can lead to problems with your brand if their people commit an error that negatively affects customer experience. Any contract made with a 3PL should lay down the responsibilities of each party in case of an untoward incident.
3.) Be prepared to help your logistics partner succeed
3PLs may also need their clients’ resources and cooperation to deliver a service that’s tailored specifically to each of them. If you make things difficult for the 3PL, you may be hampering their ability to provide you with the service you need.
The more successful a logistics provider is, the more they can invest in their people, processes, and technologies. Ultimately, their success can become your own, allowing you to benefit either through improved performance or special service agreements.
4.) Work only with companies that have a sustainable business model
When possible, you should try to work with a logistics company that has a proven track record. At the very least, you should only work with one that has a business model that you believe will succeed. This will help mitigate any risks that may come from leaving your supply chain in someone else’s hands.
5.) Choose providers that specialize in your target regions
If you have a specific geographic market, it may be worth finding logistics providers that have a deeper knowledge of the area, even if they may not have the wider expertise of other 3PLs.
Some logistics firms have special agreements with local transportation companies and government organizations that help them access certain geographic areas. This may make them the better choice if you need logistics in those places.
In any case, there’s no need to stick with one provider for all your logistics needs. You could always go with different 3PLs depending on which can deliver better service in a given area.
We hope these ideas will help you create logistics partnerships that are both sustainable and mutually beneficial. If you have other tips on building lasting relationships with outsources, feel free to share your thoughts or contact us. We’d love to hear from you.
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