A Guide to Third Party Logistics Companies

Third Party Logistics – also called 3PL – can be vital to the operation of a large or mid-size business. Essentially, it involves contracting out the strategy and labor associated with storage, packing, and delivery of your products, so that you can focus on design and implementation while being assured of a cheaper and more effective supply chain. But before starting your search, you may want to get an idea of whether or not you really need one, what companies are available to you and what services they provide, and what to watch out for when choosing a provider.

Why You May Need One

If your company is very small, you can probably get by with the supply chain you’re currently managing. Good consultants aren’t cheap, and neither is the service they provide. That said, if your company is operating at a certain level, it can be an enormous cost saver to outsource that dimension of your business and vertically integrate, so that you can focus on the design and implementation phases of your products, rather than the nuts and bolts of storage and transportation.

Do a rudimentary analysis of your business model before shopping around for a 3PL provider. Determine whether it would cost more money than it would save at this stage of your company’s development. Try to get a strong idea of what you’re looking for out of the service, because many of the options you choose are to some degree customizable.

What’s Out There

There are thousands of firms that offer 3PL solutions for every level of supply chain management. Some of the world’s largest are: C. H. Robinson Worldwide, J.B. Hunt Transport Services, and FedEx Supply Chain. Consider the level of competence that’s right for your needs, because many larger firms charge an exorbitant fee, and are only cost-effective for very large companies.

Try focusing your search on local businesses with which you can deal directly to assure that you’re getting your money’s worth. For a small or mid-size business, it can be valuable to know them face-to-face to have a comfortable and effective working relationship.

What You Should Watch Out For

Some supply chain management systems can be customized to your needs. Make sure you have a strong idea of what those needs are, and just how streamlined you’d like your process to be. Remember: over time, you can save money with a first-class 3PL provider, but you have to be able to shoulder the initial costs, which may be quite high. Overhauling your supply chain isn’t a quick or easy job, and there may be headaches when it comes to re-training and new equipment costs that could make you rethink your decision.

Conclusion

3PL providers are many and varied, and the best ones can be very valuable to you. Consider your needs carefully, and make your investment wisely, because your logistics are the face of your company.