Finding and Working with a 3rd Party Logistics (3PL) Provider

How to find and work with a 3rd party logistics provider to outsource your supply chain
By Greg Brown When is the shortest distance between two points not a straight line? When it passes through a third party logistics provider.
 

That's because third party logistics companies (3PLs), while creating a kink between vendor and customer or supplier and buyer, also take a lot of the work out of moving the stuff. For a 3rd party logistics provider, this can be as simple as basic trucking and a third party warehouse and as complex as using 3PL software for just-in-time delivery of high-tech aircraft parts, partial or full assembly of goods, customs clearance, security compliance and dozens of industry-specific tasks.

Finding the right third party logistics provider or third party logistics software has a lot to do with what you need moved, where and under what timing or regulatory circumstances. In this guide to third party logistics companies, you'll learn:

1. If third party logistics companies are the right course for your company
2. How to find a 3PL provider and third party warehouse that's a good fit
3. When to consider the bigger names in third party logistics and 3PL warehouse services
4. Buying 3PL software and 3PL services

Find where you belong in the third party logistics world

Is your company really going to benefit from 3PLs? It can be very hard to know. Some companies are loath to let go of even routine warehouse work -- like stuffing boxes -- for fear of losing touch with customers.
Try: One way to make yourself comfortable with 3PLs is to review the annual 3PL study of third party logistics companies by consultancy CapGemini, SAP, DHL and the Georgia Institute of Technology. Find 3rd party logistics provider resources at Business.com.

Shopping for a 3rd party logistics provider

Once upon a time, trucks were trucks and ships were ships. Now most cargo companies have restyled themselves as 3PL warehousing experts, and some of these 3PL services are absolutely right on target.
Try: Of course, that target is you and your company. Choosing from among hundreds of third-party logistics providers is hit and miss, but a good start on 3PL services can be reading Inbound Logistics magazine's list of Top 100 3PL Providers or -- if you know your needs -- skip ahead to its 3PL Decision Support Tool. Leonard's Guide has a database of 3PL providers in the United States, Canada and Mexico.

Selecting a 3rd party logistics provider from the big names

Although big global logistics brands can be scary for small businesses to contemplate, it's worthwhile to include in any request for pricing. They have the scale and 3PL software technology to keep costs low, where a smaller 3PL warehousing provider might not.
Try: Some of the better known 3PLs include DHL, Ryder, Kuehne + Nagel, FedEx, UPS, Panalpina, C.H. Robinson, Ceva Logistics (formerly TNT Logistics) and Bax Global. See the Business.com directory page on 3PLs for more.

Driving value with 3rd party logistics provider software

What's unspoken about the 3PL revolution is the highly important role of third party logistics software and the Web. Standardization, connectivity and networking has played a huge part, allowing companies to outsource warehousing, light manufacturing, and the like.
Try: The result is fewer companies looking to move the dumb box and more asking for a role in your business -- handling customers and suppliers, for instance. Third party logistics software makes it work. Some vendors of 3PL software include 3PL Central, Traker Systems, Cadre Technologies and Webgistix. See more on 3PL software and 3PL warehousing management software at Business.com.

• The ability of 3PLs to do your specific kind of work is a matter more of track record than native ability. Find companies in your sector and find out what third-party logistics company they rely on first.
• Third party logistics companies are consolidating. As the DHLs and FedExes of the world move in, smaller companies get priced out. Before you sign off on a years-long relationship, do some due dilligence. Will your 3PL provider exist in a couple of years?
• Signing on for 3PL warehousing is just a baby step toward fully blown supply chain management using 3PL software. Before you get a third party logistics company deeply involved with your processes, make sure they have all that you need -- inventory, scale, vehicles, software and so on.