Selecting a 3PL — are you and your potential third-party logistics partner meant for each other?

  • May 03, 2022
Factory, Industry partner or worker on digital technology

Selecting a third-party logistics (3PL) provider? Like any long-term relationship, it’s one most often built on a foundation of mutual trust and respect.

3PLs look good right now
With the number of ecommerce shoppers continuing to rise, the opportunities for brands and retailers continue to proliferate. If you’re in the thick of things — running your own omnichannel operation — dealing with warehousing, supply chain logistics and distribution can be staggering.

Now, outsourcing distribution and logistics operations can have many significant benefits. Finding the best fit for your organization is often a frustrating, arduous and drawn-out endeavor. Much of the difficulty involves the complexities of the sourcing and evaluation process. There’s a lot riding on your 3PL choice. So, how do you carefully evaluate such a critical partner?

It’s time to meet the “3Cs”
When you’re examining a 3PL candidate, they better show you the 3Cs: competence, capability and culture. Let’s look at each of these:

Competence. The burden is on you, as the potential client, to lay out — in precise terms — your expectations for the business relationship. You must be deliberate and specific in articulating your requirements. Doing so will involve input from across ‌your organization: operations, planning, quality control, sourcing and more. If the 3PL in question is to remain a valuable candidate, it should be able to distill your historical data, growth expectations, operational considerations and operational standards into a cogent, well-conceived business proposal.

Capability. Your 3PL candidate should be able to take your business needs as a starting point for an operational plan with the proper scope. It should incorporate all aspects — labor, material handling equipment (MHE) and other automation and space configuration — into a well-conceived and readily implemented action program. Along the way, the 3PL should show you its best-in-class systems and reporting capabilities. Make sure your prospective 3PL instills confidence that, in the long term, it can fulfill your business requirements and growth plans. The 3PL must convince you it can ramp up a successful operation with little to no service interruption to your customers.

Culture. Your 3PL partner will be an essential part of and an extension of your business. It must work seamlessly with your internal team as it executes on your business aims in the near and long term. But most of all, your chosen 3PL must serve your customers in a manner that’s congruent with your business’ established culture and supports your mission and values.

Putting together a solid RFP is a big ask
The best 3PL relationships start with a well-conceived request for proposal. The thing is, the organizations most in need of a 3PL probably don’t have a dedicated sourcing function in the logistics and distribution space. Developing business requirements for potential 3PL partners can be time-consuming when you don’t do it regularly. And let’s not forget the challenges involved in comparing and evaluating bid responses from various motivated 3PL suitors. It can be a lot to take on, to put it mildly.

A partner like NTT DATA can be just what your organization needs. We’ll quickly bring your organization up to speed, connect your team with established potential logistics partners and help you find — and quickly quantify — your perfect 3PL match.

— By Allison Dow

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