How to Select a Third Party Logistics Provider

We found a great article on steps to take when choosing a 3PL. Hodges Warehousing and Distribution offers great services if you need an Alabama warehouse or Alabama storage space!

Read the following article from Industry Week below:

1. Outline areas of opportunity.

One reason to outsource is to gain the ability to enter new markets or adapt to competitive forces without building out costly distribution infrastructure, Blanchard notes. "Establish a team to look at the current and future requirements of your business and critically assess your ability to meet those needs internally. This team should be comprised of key members from both your logistics organization and other areas like marketing and customer service. These additional departments can provide insight into future growth projections and shortcomings in the existing process and infrastructure."

2. Critically assess your strengths and weaknesses.

Determining what you're good at, and more importantly, those areas where your company needs the most help, will enable you to find a complimentary partner, Blanchard says. Keep in mind, though, that potential partners will have their own distinct strengths and weaknesses. "Some 3PLs are better at warehousing than transportation and vice versa. Others are great at managing the import process, but have less to offer in functional areas like inventory and order management. Merging your strengths with those of your partners will help ensure a robust result."

3. Decide what is on the table.

Once you've identified opportunities for partnering with a 3PL, determine which of these you are actually willing to pursue. "Logistics functions like warehousing and transportation influence how your customers view your ability to execute," Blanchard points out. "The decision to include some or all of these functions in your outsourcing project should be informed by a clear understanding of your company's willingness to turn over mission critical processes to a logistics partner." The success of your outsourcing project, he observes, will depend on how comfortable you are with the idea of a third party operating on your behalf.

4. Identify a shortlist of providers that meet your requirements.

At this point in the process, you should consider initiating a logistics network optimization study to "identify optimal locations for import or export gateways, assembly, merge-in-transit and other specific operations," Blanchard suggests. "Your geographic needs may require a nationwide or global network or be more focused on specific regions. Create and distribute a concise request for information (RFI) designed to ask potential partners about their capabilities. From this, develop a list of providers that have experience in your industry and markets, as this process will reduce the number of potential partners quickly." Then, examine the network infrastructure of the remaining companies and compare your requirements with the capabilities of potential providers. It's also important that you assess the technological infrastructure of potential partners, especially as it applies to such applications as warehouse management systems, order management systems or transportation management systems.

5. Consider the human element carefully.

"Cultivating relationships between key personnel on both sides throughout the outsourcing process is critical," Blanchard notes. "Ensuring not only a fit between corporate cultures, but individuals will contribute greatly to success. This is especially important during implementation and ongoing operations, but if you wait until this stage to identify issues, it will be too late. Remember you will be trusting your chosen partner with your livelihood."



To view the entire article by D. Blanchard, click here.