How to Choose a Third Party Logistics (3PL) Company that’s Right for You

So, you’ve done your homework and decided it’s time to start outsourcing your logistic needs to a third-party logistics company (3PL). Now you need to find the 3PL that’s perfect for your company.

Here at Redwood Logistics, we know how important it is for you to have a 3PL you trust, but what other criteria should you be looking into? This article will give you all the tools you need to know you’re partnering with the 3PL that’s right for you.



Does Your 3PL Company Specialize in One Area?

You have probably decided to use a 3PL because you’ve realized that logistics are not one of your company’s core competencies. Similarly, logistics companies can’t be good at everything and typically specialize in a particular vertical. Finding the 3PL that’s an expert in your needs is the first way to narrow down your search.

For example, if your company does extensive amounts of less than truckload (LTL) shipping, then finding a 3PL whose main focus is LTL will probably be a better fit than one whose primary business is full truckload (FTL) but also does some LTL.


What Technology Should a Third Party Logistics Company Use?


A 3PL’s technology capabilities are one of the most important factors to investigate when searching for the perfect fit. They should be able to give you consistent access to the measurements you most value. For example, a 3PL should be able to provide automated tracking updates which grants you the ability to proactively make decisions based on where your freight is located.

You also want to make sure that your technologies are compatible. If your company uses a cloud-based inventory management system, you should work with a 3PL that is just as progressive and can integrate with your systems.

You might also look into their data analytics, reporting and ability to produce customized business intelligence solutions. These are extra perks that can give you granular level insight into your supply chain, allowing you to see where the opportunities are to improve its efficiency.

The right technology can not only eliminate human error but increase productivity and decrease labor costs in your supply chain.


Is Your 3PL Provider Financial Stability?

While technology plays a major role in a 3PL’s ability to increase one’s supply chain efficiency, many don’t have the resources to keep up. Having a stable 3PL with a good financial track record assures you that they are in a sound position to take advantage of innovations that will protect and grow your business.

Do your due diligence when reviewing a 3PL’s financial stability. Seek independent data outside of the information provided by the 3PL. Look for information on their 10K monthly and annual reports, specifically focusing on profitability and degree of operating leverage.

If you have questions, ask their finance person. They are interested in your business and should be happy to answer any questions you have.


What Customer Service Capabilities Should a 3PL Company Have?


Look for a logistics company that’s known for their character. An efficient 3PL may get the job done, but if you focus on a provider that is known for why they operate, rather than how your overall experience will be much more pleasant.

A great 3PL has customer service capabilities that can reduce your workload in any way possible by offering a customer service team that is experienced in claims management, tracking, expediting, data procurement, reporting invoicing and auditing.


Does the 3PL Company Have Excellent Customer References?

Possibly the most vital step in choosing a 3PL that’s right for you is listening to your peers. Ask the company to provide you with customer references. Be prepared with questions and concerns to ask their customers: What do your day-to-day interactions typically look like? Is the 3PL invested in your goals and enterprises? Do they work to develop and integrate solutions to improve your supply chain?

How you and your 3PL work together will have a major impact on your success, which is why it is so important to be thorough when selecting one to work with. If you’re interested in seeing if Redwood is the perfect fit for your company, click to contact us below.