How to Choose the Perfect 3PL for Your Supply Chain

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

So, you’ve done your homework and have decided that it’s time to start outsourcing some of your larger logistics needs to a third-party logistics company (3PL).

Now you just need to find the right one...

But what criteria should you keep in mind when starting your search for the perfect 3PL partner?

We've got your back! Here are our top 5 tips for finding the best 3PL for your supply chain needs.


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. And that is okay, believe it or not, most companies do not specialize in their own logistics models.

Simply put, companies can’t be good at everything and they typically specialize in a particular vertical and master that domain.

Having said that, it is important to partner with a 3PL that is deeply knowledgeable in your industry.

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 may also handle some LTL as needed.


What Technology Should a Third Party Logistics Company Use?

A 3PL’s set of tech capabilities is one of the most important factors to investigate when beginning the search. They should be able to give you consistent access to the measurements you most value, quick onboard training, solid tech support should anything go awry, and all of it preferably tied together through a well-rounded dashboard from which you have control over the tasks you may need to interact with on a regular basis.

For example, a 3PL should be able to provide automated tracking updates which grant you the ability to proactively make decisions based on where your freight is located.

You also want to make sure that your tech platforms are compatible. If your company uses a cloud-based system, you should work with a 3PL that is just as progressive and can integrate with your systems without the need to jump through unnecessary hoops.

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 some of your labor costs.


Is Your 3PL Provider Financial Stability?

While technology plays a major role in a 3PL’s ability to increase 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 scale 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 department. They are interested in your business and should be happy to answer any questions you have if it means potentially forming a partnership.


What Customer Service Capabilities Should a 3PL Company Have?

Look for a logistics company that’s known for its 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. Connect with those in the industry who may have worked with the 3PL previously. Gauge their satisfaction with their partnership and ask questions about pain points they experienced.

You can even 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 making the selection.

Want to know if Redwood would be a good 3PL fit for your company? Reach out to us today and schedule a free consultation.