How to Choose a Right Third Party Logistics Provider

Choosing a 3PL service provider isn’t a very easy exercise, and you can’t be sure that the one you have chosen after much scrutiny, is going to deliver the kind of services it has promised. So, the selection process should be as objective as possible.

Here are some experience which over the years we have undertaken and delivered for similar assignments, some with much success and not.

What to consider ?
Geography : look for players strong enough in local geography, be it a local or national/international player. (If a big 3pl player does not have sufficient business in a particular geography, it will not be able to meet sudden scalability demands, labour problems, absenteeism etc).

Cost : Go for a player which is cost effective, not only for you but for others as well. (if someone is just trying to be cost effective to grab your business, they will not be able to sustain).

IT: if your IT systems are strong specially with strong SCM modules, then you need not worry about it. And if your organization is also not well equipped with systems for SCM, you will struggle because no 3PL company except a few big players like – DB Schenker, DHL-exel etc, are good enough with systems. They mostly have generic WMS for themselves and their customers.

Sector: choose a player, which has been providing services to your industry sector, this saves lots of pain in pooling the right manpower, training etc.

Our operational experience in many areas shows, that local players are much better service providers, for various reasons listed below:

their significant revenue is dependent on you, so they ensure the committed service levels.
mostly run by individual entrepreneurs, they are themselves involved and dedicated to their projects, rather than completely leaving it on their employees to run the show. Here you get an efficient leader without any cost to look after your warehouse operations.
local players are cost effective, as they generally have their own warehouse, labour arrangements, transport arrangement and they earn combined revenue so earning only a 3 PL management fee is not their only interest but entire business.

Hopefully this article can offer you hints in certain extent on how to find a right 3PL provider for yourself .

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