With companies embracing a new normal and reimagining supply chains, many turn to third-party logistics (3PL) providers. Here's how to optimize your 3PL relationship.
1. Know what you need. Take stock of your business and identify specific pain points so you know what to look for in a 3PL partner. Do you need help diversifying your sales channels with omnichannel and e-commerce fulfillment, flexing with changing market conditions, transitioning to a nearshoring model, or managing the increasingly complex world of reverse logistics? Also, ask how your needs may change during the next three to five years.
2. Choose a partner wisely. In logistics, one size does not fit all. A good 3PL partner has the breadth of capabilities to custom design solutions that meet the unique needs of your business now and in the future, rather than try to force fit your supply chain into a prefabricated mold. Also, a 3PL with assets, such as vehicles and warehouses, can be critical to helping your supply chain adjust to seasonality or unexpected changes in the marketplace.
3. Talk technology sophistication. A crucial indicator of a provider's ability to help mitigate supply chain disruption is its level of technological sophistication. Does the 3PL offer real-time visibility across your supply chain, collaborative tools to prevent (rather than react to) costly delays, and business intelligence and analytics to enable accurate decision-making? Also, consider whether a 3PL's overall commitment to investing in innovative technologies aligns with your goals for growth. Understanding this up front can avoid problems later.
4. Set clear expectations, early. Defined rules of engagement are critical to the success of any partnership. Identify your exact needs and establish clear goals and objectives. Let's hope you've chosen a 3PL partner with shared values to ensure your goals and objectives align.
5. Measure performance. Work with your partner to establish key performance indicators (KPIs) to measure performance and ensure continuous improvement takes place on both sides.
6. Get embed with your 3PL. Keep your 3PL partner close. Shippers must trust their partners with proprietary data and information in order for 3PLs to see across the entire business and determine how to drive overall supply chain efficiency. The collaboration can yield innovative solutions and unexpected benefits.
7. Keep your partner in the loop. Another way to get the most out of your partnership is to involve your 3PL in strategic conversations and long-term planning, including discussions about possible acquisitions, new brands, and anything that could signal changes in volume.
8. Prepare for the unknown. Supply chain disruptions—labor shortages/stoppages, technology outages, and other risks particular to your product line—can significantly affect your bottom line, so work proactively with your 3PL on disaster preparedness. Brainstorm what-if scenarios and plan for them.
9. Communicate regularly. With advanced technologies, dashboards, and KPIs in place, verbal communication can get lost. However, communication and collaboration are the keys to continuous improvement. Set a communication schedule and stick to it.
10. Trust your partner. Your partner's success depends on your success, so you can rest assured knowing your partner's recommendations reflect your best interests.