Global economics and changing social and business trends has fueled the explosive growth of
third party logistics firms, world-wide. 3PL firms provide a wide variety of services
including, warehousing, inventory management, order fulfillment as well as transportation
and distribution. The efficiency of third party logistics firms often results in
substantial savings to their clients in all of the afore-mentioned areas. Additionally,
the increased efficiency in these areas will often result in increased customer satisfaction.
The savings and benefits of using a 3PL firm are obvious. The question that begs to be
asked is, “How do you choose the right 3PL firm for your business”?
Deciding to use a third party logistics firm is a big business decision and a number of
factors must be closely examined: current products, business expansion plans, acquisitions,
strategic plans, marketing plans and where the company sees itself in the coming years.
Once the decision is made to out-source and use a 3PL firm the selection process can begin.
Requesting Information or requesting a quote
An RFI or RFQ should be as detailed as possible to give the prospective 3PL firm an accurate
picture of your logistics needs now and in the future. At a minimum a good RFI will include
- List of services to be outsourced; warehousing, order fulfillment, transportation,
inventory management, etc.
- Product specific information: product description, product weight and dimensions,
number of products to be stored
- Frequency of incoming and outgoing shipments
- A statement of performance expected: shipment accuracy, lead time for shipping, speed of
- Request for references
When selecting a 3PL firm, make certain that they can meet all of your needs. Questions that need to be
carefully considered are?
- Will the warehouse locations meet your supply chain needs now and in the future? If you need close
proximity to shipping corridors, airports or ocean ports make sure that the 3PL firm meets those needs.
- Is the 3PL firm financially sound? Is the firm operating at a profit? Are there any liens or j
udgments against the firm?
- Does the 3PL firm have the necessary warehouse space, and equipment to properly house your products
now and in the future?
- Are your special needs being met, i.e. refrigerated storage or ultra-clean storage?
- Can the firm handle rush orders?
- Is the firm capable of expanding to meet your future needs?
- Are the firm’s references acceptable?
- If needed can the firm handle hazardous materials?
- If needed can the firm handle food grade products? Make sure the firm has an A.I.B rating of
- Is the firm’s technology compatible with your requirements? If you need product labeling or custom
reports can the firm provide that service? Does the firm use EDI or RFID? Can you access data
concerning your inventory online?
- Can the firm provide inventory management and customized reporting?
Selecting the right third party logistic firm for your business will result in increased profits,
improved supply chain cycle, less capital expenditures and increase customer satisfaction.