What Is Third Party Logistics? Role in Supply Chains
Selecting the right third-party logistics provider is a critical business decision that directly impacts your supply chain efficiency, costs, and customer satisfaction. The wrong partnership can lead to service failures, increased expenses, and missed growth opportunities. Conversely, a strong 3PL partnership provides access to customized services, unique capabilities, updated technology, consistent supply chain management, cost-savings, and overall superior service.
In this blog post, we'll explore five strategies to build and leverage a strong, mutually beneficial 3PL partnership that delivers results for both parties.
1. Determine the 3PL's specialty.
Before choosing your transportation partner, make sure they can meet your needs in a superior way—better than other 3PL companies.
Most 3PLs have some sort of specialty in which they are especially proficient and experienced. This means they have specific skill sets, resources, and assets in accordance with that domain.
Consider what you most need from a transportation partner. Finding a 3PL that specializes in your specific needs can give you access to abundant resources and proficiencies you may not otherwise have.
For example, are most of your shipments international? Find a 3PL with a specialty in international transportation. They will have the knowledge and expertise to handle international concerns like customs, regulations, tracking systems, and multiple modes of transport (air, rail, water, road).
2. Compare culture and values.
Just as you want your needs to be aligned with their offerings, you also want your brand story to be aligned with theirs. What are your values? Do they have similar values?
Does your company pride itself on its eco-friendly mission? Your 3PL partner should utilize green shipping practices as well.
Are you driven by technology? Find a 3PL that has advanced, cloud-based tracking and data consolidation.
Ensuring a symbiotic association of values is crucial, as it helps build the foundation for a lasting partnership. In essence, mutual values create a shared language that helps the companies interact, communicate, and grow in unison.
3. Create shared goals.
Having shared values enables you to set mutual goals, metrics, and incentives. Discuss with your provider what you want from them… and what they want from you in return.
You can both place significance on the same key performance indicators. If you both value customer service above all else, you can choose KPIs in accordance with service, like speed of delivery, order accuracy, delivery condition, and customer satisfaction.
Utilize these goals as a way to reach some sort of long-term vision. Define this vision between your company and your 3PL. This is important because it signals that you both have plans for a long-term partnership. It also ensures that every step of your delivery process is working towards the same result.
These shared goals are also a great place to start setting long-term contracts. You can utilize KPIs as a measure of success to keep your 3PL accountable.
Sharing goals, incentives, and vision creates a dualistic development pattern, where you and your 3PL grow in tandem.
4. Build individual relationships.
Don't have a single "point person" with whom you speak when working with a provider. Create contacts with multiple individuals throughout the company. Know your 3PL partner inside and out. Get to know their team.
Chances are, if you work with your 3PL for an extended period of time, you'll have different needs and issues that will cause you to reach out to different members of the team. If you already have relationships with those individuals, it will make the process of communication smoother and more efficient.
This also helps to boost transparency. You know their company's people… and they know yours. Transparency helps build trust, ensure integrity, improve accountability, reduce inconsistencies, and create a leaner supply chain.
5. Build the collaborative partnership.
Ultimately, it's important to view your 3PL as a collaborative partner rather than an outsourcing contractor. Better yet, think of your provider as the logistics and operations branch of your company. Ensure that all members of your company understand the benefits of working with this given transportation partner.
This creates improved communication to deliver results in accordance with those shared goals and objectives. Partners actively create value for one another.
A Word On Price…
Of course, price plays a role in how you choose and interact with your 3PL partner. However, it's important you don't focus too heavily on the price tag. Rather, create a value ratio of services to price. Compare multiple companies based on offerings and cost.
Be sure to prioritize those services and specialties that are most relevant to your business (in accordance with number one on this list). Often, paying a higher price for a specialty will significantly benefit your business' growth in the long-term.
Final Thoughts
Redwood Logistics wants to be your collaborative partner towards success. We believe in the importance of building and leveraging transparent, comprehensive relationships to drive measurable success. Contact us to strengthen your transportation and supply chain management immediately.
FAQs
What should I look for in a 3PL partnership?
Look for a 3PL partnership whose specialty matches your shipping needs and whose culture fits your company. A provider may be strong in international transportation, temperature-controlled logistics, or high-volume distribution, but the best fit is the one that aligns with your operational priorities, values, and service expectations. That combination is what supports consistent performance and long-term value.
How do you make a 3PL partnership successful?
A successful 3PL partnership starts with shared goals, clear KPIs, and regular communication. Both sides should agree on what success looks like, whether that is speed of delivery, order accuracy, delivery condition, or customer satisfaction. Building relationships with multiple team members at the 3PL also improves transparency, accountability, and day-to-day coordination.
Why does a 3PL’s specialty matter so much?
A 3PL’s specialty matters because it determines how well the provider can handle your specific transportation requirements. For example, international freight needs expertise in customs, regulations, tracking systems, and multiple modes of transport. Choosing a specialist gives you access to knowledge, resources, and capabilities that a generalist provider may not offer.
Should price be the main factor when choosing a 3PL?
No, price should not be the main factor in a 3PL partnership. The better approach is to evaluate the value ratio of services to price, then compare providers based on the capabilities that matter most to your business. A higher-priced provider with the right specialty can deliver better long-term results, efficiency, and service quality.
Why is it important to align values with a 3PL partner?
Aligning values helps create a stronger and longer-lasting 3PL partnership. If your company cares about eco-friendly shipping or advanced technology, your provider should share those priorities. Common values create a shared language, making it easier to communicate, coordinate, and grow together over time.
What are the benefits of a long-term 3PL partnership?
A long-term 3PL partnership can provide customized services, more consistent supply chain management, and potential cost savings through volume commitments. It can also improve priority service during peak periods and create room for collaborative innovation and process improvement. Over time, that kind of relationship tends to support more stable and efficient operations.
Why should you build relationships with more than one person at a 3PL?
Building relationships with multiple people at a 3PL makes communication smoother and more resilient. Different issues often require different team members, so relying on one point person can slow things down. Broader relationships also improve transparency, trust, and accountability, which helps reduce inconsistencies in the supply chain.
