SUPPLY CHAIN MANAGEMENT   |   4 minute read

The logistics of getting the most out of your 3PL relationships: 8 tips

We’ve written about the pros and cons of using a third-party logistics provider for your operational logistics, and maybe you’ve decided that’s the way to go. You’ve narrowed it down to a few options, or already have a provider in mind. Exciting logistical things are in the works - great! But that’s just the first step, your 3PL relationship is actually just getting started.

Working with a 3PL is about the long-term relationship: the company will become more like a partner, than a service provider, so the relationship can use some nurturing. Here are eight things to focus on to make sure you get the most out of the 3PL relationships.

1. Find out what that 3PL does best and make sure that’s what you want to do

When you’re choosing between different providers, see what each company specializes in, and what they do that’s really impressive. Will you be making a lot of international shipments? Better choose a 3PL that is extremely knowledgeable about international logistics. If your goods are perishable, make sure you’re working with a 3PL that is used to dealing with these high-maintenance products. If packaging and appearance are a big part of your brand strategy, choose a 3PL that also values aesthetics and is detail-obsessed.

This is pretty straightforward, but it’s worth getting into the details of what exact needs you have and how the 3PL will fill them. Making sure your relationship is compatible from the very start means that your expectations will always be met with expertise and a shared understanding.

2. Make sure the price is right

Look at the services offered versus the price. You may choose to go with a 3PL that is slightly more expensive, but can give you more added value later down the line. Setting the right price from the beginning eliminates any question about value and lets you focus on the relationship itself. A more expensive option may compensate with more warehousing options closer to your customer base than others, which means faster shipping. Do a comparison between competitors that includes the cost vs value of all the key elements of your supply chain to ensure you’re getting the right deal.

Once those two key points are sorted, it’s time to start developing the relationship with the company you’ve chosen.

3. Don’t discount the importance of company culture

Make sure your company cultures are similar. You don’t have to run around holding hands and singing about bringing the world together, but there should at least be some shared values. If you’re really into the environment, a relationship with a 3PL that doesn’t value that will probably be frustrating and ultimately, can damage your brand image. Is your culture fun and quirky? See if you can find a 3PL that kind of is too. If your 3PL has a similar company culture, or at least can understand yours, the relationship will definitely last longer.

4. Build relationships with multiple contacts within the 3PL company

The more you know about your 3PL the better. And you can get to know your 3PL by developing relationships with multiple people within the company. This will also improve transparency between you both - an important factor when doing business long term with another company.

build contents5. Consider your partnership with a 3PL to be collaborative

Rather than seeing the 3PL as just a service provider, start to think of it as a collaborative relationship - even the logistics branch of your own company. For a start, make sure that you communicate all related intelligence and information clearly and regularly. Consider investing in training or team exercises which will increase collaborative effort and improve overall performance from both sides. Along those lines, when it comes to performance:

6. Be open about your company’s goals

No need to reveal your entire business strategy, but be open with your goals for the company and how you want them to go. Set a long-term vision, which can ensure you’re both looking at the same long-term relationship. And speaking of goals:

7. Set shared KPIs and incentivize good performance

Develop Key Performance Indicators (KPIs) that are shared, and can be incentivized. This makes it easier to evaluate performance and make sure that it’s a shared goal between both. Not sure what some of those shared KPIs might be? In particular, they can revolve around customer service, shipping times, delivery condition, and order accuracy.

Listing KPIs using a Laptop

8. Make sure you have a firm understanding of liabilities and the legal stuff

When things do go wrong, or at least not as planned (which they will), it always helps to have set parameters for who is dealing with and is liable for what. It also helps to make sure your 3PL is in compliance with all standards, insurance plans, safety policies and laws, especially when you’re dealing with an international supply chain. Make sure that the standards are set, which allows for plenty of reassurance that everything is above board, so to speak.

Love your 3PL

Or if it’s not love, make sure it’s at least a relationship built on trust, good performance and transparency. Once you’ve made the decision to send your beloved products into the big market on their own, and to put your brand image in the hands of a 3PL, make sure it’s one that will carry your company’s values, work ethic and ways of doing business along with your products.