Choosing a third-party logistics company to work with is very important to a business’s success but can be a stressful process. With supply chains becoming more complex all the time, ensuring that things get where they are supposed to go is pretty challenging. Companies that choose to partner with a third-party logistics (3PL) provider need to maintain a positive and healthy relationship with them to ensure the overall success of the venture.
Your 3PL relationship can benefit you in many ways, including streamlining your supply chain operations and helping you focus on other aspects of your business. They also help you keep up with any growth or trends in the industry. In order to get the most out of your 3PL provider, you must maintain a successful partnership with them.
But how do you build that strong relationship?
What is 3PL?
A 3PL, or a third-party logistics company, provides outsourced logistics services to businesses. This includes functions such as transportation, warehousing, storage of pallets, and order fulfillment. The goal of a 3PL is to help businesses improve their supply chain management by more efficiently and cost-effectively improving your company’s logistics activities. They can do this because a 3PL is a specialist provider. They only do logistics so they know the industry, the technology, and the best strategies. By partnering with a 3PL, businesses can focus on their core competencies and improve their customer service, while reducing their costs and increasing their efficiency.
Tips to Maintain a Successful 3PL Relationship
Managing your 3PL’s performance can be tricky when you are first establishing a relationship together. Let’s take a look at some potential problems and offer some tips on how to mitigate them.
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Do Your Homework
Preparation is half the victory. When you are about to begin with a new fulfillment partner, it is imperative that you know what you are in for.
Here are five vital considerations:
- Services Offered: Does your 3PL check off the right boxes for your business? Would you have to change any aspect of your daily operations if you were to make the switch?
- Technology and Integrations: Can your 3PL integrate with your shopping cart or marketplace? If not, how will you be getting your orders out to them?
- Location: Is your 3PL in a strategic location? It does not have to be near you, but it should be accessible and convenient to all or the majority of your demographic.
- Price: Is your 3PL affordable? Do you understand the fees and rates in your contract?
- Experience and Reputation: How long has your 3PL been in business? What do clients, previous and existing, have to say about it?
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Set Clear Expectations
A working relationship is only successful if you set clear expectations up front, and they’re agreed upon by both parties. Establish what is important for your company and what you are looking to achieve through this partnership. Make sure to outline your key objectives and requirements to your 3PL before you continue growing your relationship. This will help set the tone and your expectations which will solidify the foundation for a successful partnership.
When setting these expectations, always remember that you are not the 3PL’s only customer. Your needs may outpace their ability to provide for you, and you have to be willing to either adjust your expectations or find another solution.
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Establish Single Points of Contact
Another tip to maintain a good relationship with your 3PL partner is to appoint someone in a senior position to deal with any issues and challenges with your part of the supply chain. And you should expect the firm to do the same. By channeling the exchange of information through these senior parties, the issues can be quickly and efficiently assessed. Both parties will be empowered and ready to make good decisions that lead to speedy resolutions.
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Communicate Clearly and Often
Routine communication with your 3PL is essential to a solid relationship, especially because your 3PL is essentially acting on your business’s behalf. You cannot make a big decision such as changing packaging or bringing in a new product line without letting your 3PL know of the change so they can shift their services accordingly. And always let them know when inventory is expected to arrive.
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Measure Performance Regularly
It is easy to forget to make quality and performance standards a part of the contract with your 3PL partner, however, this is one of the most important tips to remember. Once you are clear on the general requirements, it is time to get to details. Establish a set of KPIs and evaluation metrics which are in line with your general objectives and communicate them to your 3PL. This will help you monitor and evaluate your 3PL’s performance and contribute to achieving bigger objectives.
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Regular On-Site Visits
Even with live updates and real-time data sharing, it is not always possible to get a clear view of how your 3PL provider is operating. This is why it is valuable to make on-site visits regularly. You will benefit from seeing how your partner works to help your business thrive and from building relationships with the people working on your account. The more you invest in this partnership, the more confident you will both feel about your partnership. Understanding how your 3PL provider operates will also make it easier for you to discuss major changes your team wants to make regarding policies or procedures.
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Involve Your 3PL Provider in Long-Term Planning
Your 3PL is a partner in your business’s long-term growth and success. You want to ensure that they will be able to meet your needs into the future, so involve them in your long-term planning. In addition to keeping them informed on changes you are going to make that impact your service from your 3PL, they can provide feedback and guidance based on their experience working with other companies. This will help you avoid many frustrating setbacks and missteps, potentially giving you greater success overall.
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Know Your 3PL Team
Any partnership and relationship are solely about people. Get to know your 3PL representatives both professionally and personally. The better you know each other, the easier it will be to work together and be efficient. Ultimately, you will be working together every day. Having occasional face-to-face meetings to discuss their performance and review objectives is highly recommended as well.
A 3PL is a powerful tool in managing your supply chain effectively both, time- and money wise. There’s nothing quite like a stable long-term partnership with a 3PL who knows what you need before you even say it.
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Consider the Company Culture
As a business owner, you have to work with a wide variety of vendors and providers that may do things differently from you. The culture of your 3PL provider should be similar to yours. Sharing values with your partners will help your goals to align. The closer your culture is with your partner, the longer-lasting the relationship will be.
The FLEX Logistics Team is Here to Help!
Our team understands the importance of getting your products to the market. That is why we aim to understand your business and build lasting relationships with you and your team. Whether you are looking to add a new warehouse to your existing operations, growing and need to increase your distribution efforts, or starting a new company, FLEX has the solutions to meet your supply chain needs.
Contact us today to discuss your current and future warehousing and logistics needs. We will work together with you to understand your requirements and develop a solution that will set you up for future success.