Tips on Effectively Navigating a 3PL Evaluation

by | Jan 3, 2020

Let’s say you are a supplier experiencing a growth curve. Suddenly, almost overnight, your business has exploded. Maybe you’ve recently acquired a new retail customer who is asking you to meet particular shipping or inventory protocols? More likely, your business has been excellent, and you are merely outgrowing your ability to warehouse your products from your home base.

Whatever your particular scenario, managing inventory, shipping, receiving, picking, packing, and other areas of the warehousing process can be time-consuming and stressful for small-to-medium-sized businesses. This takes time away from your main priorities: growing your business and satisfying your customers.

Outsourcing these processes affords you with many benefits but choosing the right 3PL provider involves much more than just scanning a series of price lists. It’s a partnership.

Finding the right provider for your budget shouldn’t mean having to settle for a “one size fits all” vendor. If your plan is to grow your business, your 3PL provider must be able to grow with you, to help, not hamper that trajectory.

Your 3PL evaluation should focus on your candidate’s ability to adapt and scale, considering the following criteria: Warehouse space, workforce size, portfolio of services, technology, and infrastructure. Here are other essential considerations to keep in mind when choosing a 3PL partner:

Do they have expertise in your business vertical?

Many 3PLs specialize in a particular vertical – a specific region or retailer relationship – because they have deep in-depth knowledge of the requirements. Suppliers rely on and leverage this knowledge to grow their business. Growth in e-commerce means 3PLs must create or have the ability to handle:

  • Branded packing slips
  • Unique shipping requirements for each retailer
  • Reverse logistics
  • ASNs and pallet configurations
  • Custom packing requirements
  • Short-notice orders and recalls
  • Sensitive inventory items

To demonstrate this ability, logistics companies can provide several proof points, including referenceable customers, scorecards, and facility tours. These should all be part of the vetting process of choosing a logistics provider.

Can they demonstrate proven reliability during unplanned spikes in business?

Ensure your 3PL candidate can effectively handle exceptions and emergencies that may arise during peak season times or other situations and consider your short and long-term future as part of your selection process. If you expect your business to grow, you should work with a partner you can trust to handle it.

  • Do they have the ability to provide live inventory checks?
  • Can they scale on short notice if you have volume increases?
  • Do they have the appropriate warehouse space and workforce?
  • Do they have online systems/processes to keep orders organized and keep orders moving efficiently?

Do they have technologies that support your business now (and into the future)?

Retail and supply chain technologies are evolving dynamically, therefore it is critical to work with a 3PL partner that uses the latest technology and equipment. This will make them more beneficial to you as a business partner:

  • Does your potential 3PL partner have a robust warehouse management system?
  • Do they have the technology necessary to handle accurate warehousing processes?
  • Is their material handling automated or is it manually processed?
  • Does their system provide accurate inventory reports?

SPS can help you in your 3PL evaluation process.

Through our partnerships with dozens of 3PLs, we can help you find the right one to elevate your business and gain efficiencies.

Ready to learn more? Speak with one of our retail supply chain experts for a no-hassle consultation.

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SPS Commerce Blog Team