What to Look For in a Tech-Enabled 4PL Partner
When choosing a 4PL partner, it’s essential to select one that is tech-enabled in order to reap the greatest benefits.
In this blog, we’ll cover why seeking out a tech-enabled 4PL provider is essential and what to ask them when choosing between different options.
Ask your prospective 4PL providers about:
Both technology and SOPs
Specialization or areas of expertise
What KPIs and monitoring are tracked and provided after onboarding
Quick Recap: What is a 4PL?
4PL is a type of business that manages your entire supply chain and logistics operation. This differs from a 3PL, which manages fulfilment, such as warehousing and shipping. In other words, you can think of a 4PL as an organization that orchestrates your supply chain on your behalf.
To give a quick recap, a 4PL can be a good decision for your business if you need:
- a single point of contact for your supply chain needs
- a more streamlined approach compared to managing your own 3PL supply network across multiple regions to scale quickly or more effectively
Why Tech Enabled?
But why is technology important? Because streamlined, connected information saves time, keeps customers informed, allows you to make better business decisions, and stay ahead of the curve when it comes to issues like recalls or product integrity.
Key Questions To Ask A Potential Tech-Enabled 4PL Partner
We know it’s tough to choose between different supply chain providers. Since 4PLs essentially manage your entire supply chain, the decision has extremely high stakes for your brand and bottom line.
With all this in mind, here are our suggestions on what to ask when choosing a 4PL partner both when you are browsing for a partner and after you are being onboarded with your selected option.
What to Ask a Potential 4PL Before Onboarding
"What are your 4PL's standard operating procedures?"
Ensuring the 4PL you’re entrusting your logistics network to can do what they say they’re going to do is one of the simplest yet most critical things you can do to ensure that your experience will go well.
Our VP Partnerships, Kaitlin, noted that when we work with businesses that are disgruntled with past partners, “the frustration [is often because] they haven't asked a lot of questions about the standard operating procedures, ‘how do you make sure things go well, what KPIs do you measure’ would have saved our clients headache.”
Because of this, we suggest that you ask about a potential 4PL partner’s:
- Perfect order rate
- Inventory accuracy
- Claims rates
- Happy customers, testimonials, and cast studies for use cases similar to yours
"What SCM technology does your 4PL use?"
Most 4PL operations use technology like warehouse, inventory, and transportation management systems to provide you with visibility into the fulfillment process.
Can your software integrate with my ERP or E-commerce system?
If you entrust your operation to a 4PL, you want to ensure that all orders and data are perfectly synchronized. One way to do this is to ensure you can easily sync your e-commerce website, order portal, and accounting software with the 4PL operation’s software.
Example: At Routeique, our clients can enable their customers to order through our Order Portal or quickly and easily connect their Shopify or other e-commerce sites directly to our solutions. Additionally, our software connects with QuickBooks and other accounting tools for up-to-the-minute accounting info.
Our tip: Look for a 4PL with software that you can easily integrate into your existing software stack.
"What is your area of expertise? What types of 4PL customers are you currently serving?"
A third question to ask is about your potential 4PL’s expertise and experience. This can help determine if they have what it takes to ensure accurate, fast fulfillment and enable you to deliver on your customer's promise.
While many 4PL can be very versatile, it can help to ask if they have worked with businesses similar to yours, whether that’s eCommerce, Food Service, B2B, B2C, or something else. Additionally, you might need a 4PL with different strengths depending on whether you are looking for long-term or short-term storage and how hands-on or hands-off you would like to be, and
Example: At Routeique, we were born in the FMCG space. Our software was built and tested with one of the largest food manufacturers worldwide, and we have a wealth of experience fulfilling and moving temperature and time-sensitive goods.
In addition to developing software in this niche, we’ve provided extensive professional services, consulting, and solutions to our clients in this space.
Our tip: Finding a 4PL partner with experience solving problems that can affect your business means that your fulfillment will be in good hands and that you’ll have a valuable source of insights and expertise as your company grows.
What will onboarding/implementation be like?
We recommend asking questions about onboarding/implementation during the initial evaluation process. This will help you set expectations and ensure all of your business needs are met.
We suggest asking for details such as:
- What will the onboarding process look like overall?
- How often will we touch base?
- Who is the point of contact?
- What kind of reporting will be required.
Our VP Partnerships, Kaitlin, notes that “usually people focus on the time, but that is not the key question, they should be asking more what their experience will look like.”
How Does Your Pricing Structure Work?
It’s no secret that supply chain costs have increased recently. For this reason, it’s important to understand a prospective 4PL partner’s pricing structure. A clear and transparent pricing structure is of utmost importance. It’s important to understand any fees related to your use case, such as additional costs for heavy, fragile, or frozen items.
Getting a custom quote and insight into the ROI you can expect ensures you will get the best possible value for your investment.
Our Tips: Pricing is the last “box to check” when choosing a 4PL partner. It can be easy to get caught up in cost comparisons, but we recommend that instead of focusing on pricing, it is important to focus on the quality of services you will receive and ROI. That said, a transparent pricing structure does not necessarily mean a simple one.
For example, our pricing structure is more detailed than a simple flat rate, but it is transparent and clear and structured to only charge our clients for the items they use.
Our pricing is based on several key factors, like item type and dimensions, so you’re only being charged exactly for the items you use. We understand that picking one small box should cost less than picking several large frozen items and structure our pricing plans accordingly.
Once You Choose a 4PL, Monitor These KPIs
Working with a 4PL takes a lot of work off your plate, but it certainly isn’t “set it and forget it.” You want to continue to check in both to keep up to date on the status of your supply chain and to ensure that you are delivering on your customer promise.
We suggest tracking:
- perfect orders
- inventory accuracy
- when to reorder
We also suggest:
- meeting virtually with your 4pl time to review tracking at regular intervals
- ensuring that when things aren’t going out as scheduled, you and your 4PL understand why
A good 4PL partner should keep you updated on the overview and be proactive in noticing and addressing situations like inventory getting depleted.
Get In Touch
You can visit us through the contact form above to learn more about our 4PL and professional services!