Do we keep our logistics in-house or do we outsource it? It’s a question that bothers Supply Chain managers all too frequently. To dig even deeper, what functions do we keep in-house and what do we outsource? Who do we select as a viable 3PL partner? The answers to these questions lie somewhere between an art and a science.
The most cardinal step in the selecting a 3PL Partner is deciding what you want. This will eventually take you down the path of checking the right boxes that pertain to your needs and what the vendors are offering. Your needs can be varied, and specific but will need to be documented and assigned a weightage to determine its importance to your supply chain.
It is imperative that you select a 3PL provider whose culture is aligned with that of their customers. Transparency in communication and corporate integrity score high on the list of must-haves for any logistics partner. The RFI/RFP process is where you would start inquiring about your potential partner’s clientele. You will need to evaluate potential partners on the basis of best practices adopted and the tangible cost and service level outcomes that stem from these. Additionally, a big indicator of the partner’s culture is the emphasis they place on labor training and satisfaction. High labor retention leads to higher picking efficiencies and a significantly lower on-boarding time for you, the new customer.
The number of potential order combinations can be staggering and evaluating a partner on their ability to process these combinations is crucial. Several 3PL partners have specific industries they’re experts in. A small family owned 3PL may not have the wherewithal to run an automotive OEM supply operation, but may be better suited to serve the automotive retail or eCommerce aftermarket through efficient assembly and kitting operations. The special processing demands of each industry are so different that a 3PL specializing in apparel processing may not be able to serve a pharmaceutical or automotive customer due to the vastly different natures of these businesses. Also, evaluating fleet ownership and relationships with transportation vendors is vital to maintain lead times and service level goals.
Technology adoption is an important factor when choosing the right 3PL. It is key to integrate your host ERP and inventory systems with the logistics service provider’s WMS systems to ensure a smooth two-way transfer of data between the two systems. Some of the key areas you’ll need to evaluate is the integrability of your ASN and Distribution Orders EDI interfaces that tell your 3PL how much inventory is coming in to the DC and how much to pick. This is will help gain visibility to your inventory, especially in a multi-DC network. Furthermore, the 3PL’s WMS must be able to provide access to a detailed view of inventory by location class and the associated picks in order to provide a constant handle on your inventory inside the 3PL’s DC. Other aspects to consider are parcel integration capabilities, ship confirm interfaces to provide tracking capabilities to your customers and the use of Warehouse Control Systems for speed and efficiency of Material Handling.
Above everything, it is important to talk to customers regarding their experiences with the potential partners you’ve narrowed it down to. Engaging industry experts who can help you uncover the value in a 3PL partnership is certainly recommended. We at Bricz, have partnerships with service providers and customers alike and are uniquely positioned to understand both sides of the demand-supply divide. Bricz’s keen industry expertise and robust RFI and RFP process can be leveraged for partners to attain lasting benefits and relationships.
Contributor: Deepak Mohan