Building a Successful Partnership With Your 3PL Provider

Working with a 3PL partnership is just that, a partnership, and only works when both teams work in unison. Like any other process in a supply chain, getting your 3PL partnership off to the best start begins before any implementation even begins. Keep reading to see how you can set your 3PL clients up for success.

Key Takeaways:

• Initial steps should include understanding goals and expectations, as well as a potential partners' network. 

• Order accuracy, on-time shipping, receiving efficiency, cost per unit, and time to process returns, are all important KPIs to track.

• A 3PL partnership is a great way to manage business operations, whether it’s for scaling, entering new markets, or looking to gain a technological edge on the competition.

What is a 3PL Provider?

First of all, what is a 3PL provider, and how can it benefit your operation? A 3PL provider is a third-party logistics company that takes on the responsibilities of warehousing, packing, and shipping
your products when those facilities and capabilities are not available for your company to handle
on its own. 

As mentioned, these services can be of great benefit when your operation does not possess these capabilities already and does not necessarily have the funds to implement them from the ground up. Additionally, working with a 3PL provider can open your operation up to new areas and markets that would not be possible to enter otherwise. 

Using these resources also provides a greater level of flexibility for your business to scale up or down much faster and more efficiently as demands and consumer habits shift throughout the year. 

Initial Considerations

Optimizing your 3PL services begins before you’ve even selected a partner to work with. There are several key considerations you must take into account when looking for a 3PL service provider that will allow you to make a better-informed decision for your end partner. 

Manage Expectations

Nothing is more important than sitting down with your 3PL partner and ensuring that both parties deeply understand the current state of business, expectations for your tandem operations, and any goals when it comes to growth, scaling, and the future in general. If both parties enter the relationship with a great deal of respect and understanding, your chances of a successful partnership greatly increase. 

Discuss Their Partners

Oftentimes 3PL providers utilize their own network of partners, including various carriers. It’s important that you understand the network that your partners have as well, and to ensure they are insured, established, and safe. 

Understand Why You Are Looking for 3PL

Have a deep look into your own operation and see why you are even looking for 3PL in the first place. Are you looking to enter new markets? Are you looking for someone to handle your increased volumes? Are you looking for someone with greater tech capabilities? Knowing exactly why you are looking for 3Pl services will allow you to find a better fit for your needs. 

What Technology They Use

As mentioned above, technology capabilities are a very key consideration when looking for 3PL partners. Finding a partner that has a higher level of technology implementation can mean increased visibility, less damaged/lost goods, and greater customer satisfaction. At the very least, it is important to find a partner that meets your same technological capabilities, not one that is less advanced than your own operation. 

You’ll never know if your processes are working if you don’t track and analyze the right data.

Monitoring and Tracking

This partially comes back to your 3PL partner’s technological capabilities, but in order to know what is working, you must first collect the right data and analyze it properly. Tools like a Warehouse Management System (WMS), Transportation Management System (TMS), and Yard Management System (YMS), all collect various different data points that are then stored in an easy-to-manage platform. 

An important thing to outline with your partners is review periods. Having regular meetings where both parties can go over the data together to understand what is working and what isn’t is crucial to the long-term success of your operation. 

There are a number of different KPIs that are important to track when it comes to 3PL, including:

Order Accuracy

Not only does an order need to get where it’s going, it also must contain the right items. This KPI is one that should be held to a high standard, reminding as close to 100% as possible. 

On-Time Shipping

Shipping times are one of the most crucial factors for consumer decision-making. With that in mind, making sure your products arrive to your customers on time is of the utmost importance. While speedy delivery is important, setting manageable expectations for shipping times is more important. A product delivered on time with a slower shipping time is often better than one delivered late with a faster shipping time in terms of customer satisfaction. 

Receiving Efficiency

This KPI is crucial to understanding areas where bottlenecks may appear. The less time your product spends sitting in a receiving area, rather than on the shelves ready to be picked, the better. 

Cost Per Unit Shipped 

This rather self-explanatory KPI allows you to monitor shipping costs. By taking the total cost of shipping and dividing it by the total number of units shipped, you can roughly see the cost per unit and decide whether action needs to be taken to better manage transport costs. 

Time to Process Returns

Returns are a very common, however unfortunate, aspect of e-commerce and the supply chain as a whole. Being able to process returns quickly and efficiently will help greatly salvage customer satisfaction in a time when they may already be feeling dissatisfied. Streamline return processes can easily set you aside from the competition. 

Conclusion

A 3PL partnership is a great way to manage business operations, whether it’s for scaling, entering new markets, or looking to gain a technological edge on the competition. Communication is key when it comes to setting up a partnership like this for success. Having a clear understanding of goals and expectations before beginning is key, and tracking and monitoring KPIs and data throughout operations will allow for better optimization further down the line. 

Routeique is a platform that creates this seamless connection between partners that allows for greater success for everyone involved. With our host of tools and industry expertise, our team allows you to deliver on your customer’s promises. Our tools provide you and your clients with insight, foresight, and oversight into every aspect of fulfillment.