Choosing a 3PL can be a difficult process for many companies. While the need for a 3PL can be clear, it is often difficult to compare one to another because of the lack of industry wide standards, accurate self-published data, and transparency. Every 3Pl will throw out statistical greatness in the form of on time percentage, volume accuracy, and/or service achievements. The problem with self-issued statistics is that they are subject to “creative mathematics”. In other words, unless independently verified, statistics don’t mean much.
There are 5 main differentiators between 3Pls that can be evaluated simply and accurately. Furthermore, they cannot be modified by the 3PL to present an inaccurate picture.
Not only can technology make the difference in achieving a deadline and missing it, it can also show the commitment of a 3PL to its clients. Good technology allows for quality data mining, which leads to quality analytics, and finally better planning and results for the client. Specifically, quality analytics can reveal unknown trends that lead to cost reduction and optimization.
How do you rate technology? Just ask for sample reporting or even better provide a data set of your own to be analyzed. This should let you know that capabilities of the technology being used as well as the people using it (which can be just as important).
Best practices, standard operating procedures, TQM, and other methods can all reveal the core importance of a 3PL. A core importance is an item that is put ahead of all others. Many companies have more than one core importance, such as order completion, customer satisfaction, and/or value pricing.
If a 3PL’s core importance is out of sync with yours, there is a greater chance the relationship will be rough, adversarial, and ultimately expensive.
“We’ve always done it that way” or “This is the way that has worked in the past”. There is knowledge in history and things do not happen in a vacuum, however without any innovation a 3PL becomes stagnant and increasingly relies on outdated modalities to force results.
Innovation should be highlighted. What improvements have been made over the past years? How has the 3PL changed its methods to reflect the current nature of the field?
Typically, the customer facing side of a 3PL is professional. Sales reps, management, etc. will all have a polished demeanor. BU the true test is the ground level workers. Warehouse, courier drivers, even dispatchers will have a far greater effect on customer satisfaction than any member of management or sales.
Always ask to see an example of the courier uniform, even better have a test order run that delivers to your facility.
Even if a 3PL has all their ducks in a row, risk mitigation demands high compliance standards. Often overlooked to cut corners and keep costs low, a 3PL can be a dangerous vulnerability in many areas.
Regulation complexity and oversight has increased in recent years. Every 3PL should have a dedicated staff position that is responsible to stay current on all applicable regulations. This position should also have regular access to legal counsel to independently verify the thoroughness and completeness of internal policy.
Speaking of policy, there should be no amount of opaqueness in relieving these practices. A 3PL that does not reveal its compliance measures is a 3PL that does not have compliance measures. No matter the format, compliance is first and foremost transparency between business partners. A 3PL doubly so because of the inherent risks of transportation.