When you break it down, you only have two choices to make in business: 1. Accept the situation. 2. Change the situation. Now… how will you apply that to fulfillment?
Selecting the right third-party logistics (3PL) provider can make a company’s supply chain successful. Choose poorly, though; that chain can easily drag your business down and out. But what does it take to secure the 3PL provider that helps you grow? There are key factors every business should consider when choosing a 3PL partner that emphasizes critical aspects like reliability, technology, and scalability.
Why Choose a 3PL Provider?
Outsourcing logistics is a strategic move for businesses, particularly those wanting to streamline operations, cut costs, and focus on their core competencies. 3PL providers handle various services, including warehousing, order fulfillment, inventory management, and transportation. This allows businesses to rely on the provider’s expertise and infrastructure while focusing on growth and customer satisfaction.
The decision to partner with a 3PL is a big one. With many 3PL providers available, it’s critical to know what to look for in a provider:
1. Reliability and Reputation
Reliability is the most important factor to consider when choosing a 3PL partner. A 3PL’s ability to consistently deliver products on time and manage logistics operations efficiently is the foundation of a successful partnership. When vetting potential providers, looking at their track record for delivering quality service is essential. Evaluate reliability through:
- Client References: Reach out to current or past clients to understand their experiences. Ask about the provider’s performance during peak seasons and how they handle unexpected challenges.
- Industry Reputation: A provider with a solid reputation for excellent customer service and problem-solving can significantly impact your business success.
- Service-Level Agreements (SLAs): Ensure your provider is transparent about their performance guarantees and penalties for missed deadlines.
* 84% of shippers cite reliability as the most important factor when selecting a logistics partner. (Third-Party Logistics Study)
* Companies that maintain a 95%+ on-time delivery rate experience a significant reduction in operational disruptions, boosting customer satisfaction by up to 16%. (Logistics Management)
2. Technology Capabilities
Technology is the backbone of efficient logistics. A tech-savvy 3PL provider can offer better visibility, improve efficiency, and enable real-time data sharing, which is crucial for making informed decisions — including those that address potential disruptions before they escalate. Look for technology that provides:
- Warehouse Management Systems (WMS): A WMS optimizes inventory management, tracking, and picking processes, reducing errors and improving order accuracy.
- Order Management Systems (OMS): An OMS integrates with your sales platforms to ensure smooth and synchronized order fulfillment.
- Automation: Automation tools, such as robotics and AI-driven analytics, can streamline operations and reduce human error, which leads to improved efficiency and cost savings.
* Digital tools and automation can cut warehouse labor costs by 40%. (McKinsey)
* Companies leveraging TMS systems reduced freight costs by 15%, while those using AI-driven analytics increased on-time deliveries by 10-30%. (Deloitte)
* Real-time data from a 3PL TMS can improve delivery performance by 15%. (Capgemini)
3. Scalability and Flexibility
A 3PL provider should be able to grow with your business. A scalable partner will help you adapt to changes in demand without requiring you to switch providers constantly. Whether you experience seasonal fluctuations in demand or plan for rapid growth, your logistics partner needs to offer scalability and flexibility. Scalability will help you:
- Adjust to Volume Spikes: During peak seasons or sales events, a scalable 3PL provider will have the resources to handle increased order volumes without compromising service levels.
- Expand Geographically: If you plan to expand into new markets, your 3PL partner should have the capacity and network to support distribution in new regions without major disruptions.
- Customize Service: A flexible 3PL provider can tailor their services to meet your specific needs, whether it’s handling specialized packaging, working with perishable goods, or offering multiple delivery options.
* Businesses that scale their logistics with a 3PL can improve operational efficiencies by up to 25%. (Gartner)
* During peak seasons, scaling with a 3PL can reduce logistics costs 10-20%. (DHL)
4. Industry Expertise
Each industry comes with its logistics challenges, from regulatory requirements to specific storage conditions. It’s important to select a 3PL provider that has experience working with your industry: you’re looking for both proven understanding and established strategies to improve efficiency and reduce costs. Industry knowledge helps to support:
- Regulatory Compliance: A 3PL with deep knowledge of your industry will be better equipped to navigate compliance issues, such as handling hazardous materials or meeting pharmaceutical regulations.
- Tailored Solutions: Providers with industry-specific expertise can offer more relevant solutions, such as temperature-controlled warehousing for food or detailed kitting services for electronics.
- Supply Chain Optimization: An experienced 3PL partner understands the unique logistics challenges in your industry and can help you avoid common pitfalls.
* 20% of healthcare product recalls are due to failures in cold chain logistics — a $35 billion dollar annual loss that illustrates the importance of industry expertise in compliance and handling. (IQVIA)
5. Cost Transparency and Value
While cost isn’t the only factor in your decision, it’s essential to understand the pricing structure of a 3PL provider to ensure it aligns with your budget. A transparent cost structure coupled with high value in service delivery is key to a fruitful partnership. Evaluate the overall value a provider can offer by considering:
- Hidden Fees: Some 3PL providers have hidden costs for additional services, such as packaging, returns management, or rush orders. Make sure you understand the full cost structure.
- Return on Investment (ROI): Evaluate how the services offered by the 3PL provider can improve your bottom line. A provider that can reduce shipping times, decrease errors, or improve efficiency can offset the cost of their services with long-term value.
* 43% of companies have experienced hidden fees/unexpected charges from a 3PL. (Eye for Transport)
* Companies that regularly review cost structure with their 3PL report up to a 14% reduction in unexpected logistics costs.
6. Communication and Customer Support
Smooth communication is critical to any successful partnership. But it’s especially important in logistics, where timely updates and problem-solving are necessary. A collaborative relationship based on transparency and effective communication helps both parties work toward shared goals and improve overall performance. Will your 3PL provider be proactive, ensuring operations run smoothly? You can evaluate this by looking for:
- Dedicated Account Managers: A dedicated point of contact can help you quickly resolve issues and keep operations on track.
- Responsiveness: How quickly does the 3PL provider respond to inquiries or issues? Timely communication can prevent minor problems from becoming major disruptions.
- Regular Reporting: Ensure that the provider offers regular performance updates, including reports on order accuracy, on-time deliveries, and other key metrics.
* 75% of customers expect companies to provide real-time updates during the delivery process. (Salesforce)
* 84% of companies that invest in proactive customer service increase customer satisfaction. (Microsoft)
Exceed Your 3PL Expectations with NBD
Choosing the right third-party logistics (3PL) provider is crucial to your business’s operational success. While many providers offer services, only a select few have the experience and experts that can harness those into a team-driven partnership committed to your growth. That’s what you’ll find with NBD: operational maturity honed over decades of successful client relationships.
Flexible, personalized solutions
Designed to scale alongside your business, whether you’re expanding channels, entering new markets, or facing seasonal demand spikes.
Industry expertise across sectors
For specialized solutions tailored to your unique challenges.
Long-term client partnerships
Supporting businesses through every stage, with continuous 3PL operations that align to your needs.
Leading-edge technology platforms
Including WMS and TMS for real-time insights into your operations, giving you control and visibility at every step.
A strategic use of automation
To manage your logistics with speed and precision, through applied technology tailored to fit your unique operational needs. (NBD ranks among just 7% of 3PLs for advanced robotics.)
A commitment to sustainability
LEED-certified warehouses, optimized shipping routes, and green transportation options to help you achieve sustainability goals and broaden your appeal to eco-friendly customers.
Total landed cost optimization
Combining competitive rates and strategic insight to limit costs and boost profitability.
Proactive, hands-on service
A dedicated account manager and employee ownership create a dedicated environment where we’re working for your success.
At the end of the day or the start of the road, there are just two choices to make in business. 1. Accept the situation. 2. Change the situation. Want our reco? Let’s partner on the forward-thinking logistics you need for efficiency and growth — fulfillment that makes certain your products reach happy customers safely and on time.
