If your business’s shipping, receiving, and inventory management is starting to take inordinate amounts of time and resources, then it may be time to outsource these duties to a professional. When you partner with a Third Party Logistics (3PL) firm, you place all of these duties in their hands, leaving you to do what you do best: run your business. Many CEO’s and CFO’s under estimate the work involved in setting up and managing a warehouse and logistics division. Don’t fall into that trap! This article provides you with some guidance on how to choose your 3PL partner.
Since the 3PL will have a huge influence on your operation’s effectiveness, it’s imperative that you make the right choice in selecting your logistics partner. The wrong choice can result in huge financial losses. This applies to both b2b or b2c businesses, but especially in the eCommerce world, your reputation as a business is only as strong as your ability to keep promises to consumers. Once you make the transition to a 3PL, you’re putting a large chunk of your brand’s reliability in their hands. So do the risk assessment in dollar terms, it is both a logistics choice but also a marketing one! It’s one of the most important decisions your company will ever make, so take the time to get it right. Here are a few points to consider:
Start with a qualified internal team to evaluate new 3PLs
A move to outsourced logistics will likely affect every aspect of your business. Depending on the size of your operation, you should consider putting together a team with representatives from every department, especially supply chain/logistics, information technology, sales/marketing, purchasing, and finance departments. This will provide valuable insight into the viability of the new partnership, and ensure company-wide buy-in once the decision is made. From our experience at Westset Logistics, executives who relate to process control in the logistics world, supply chain cost management, economics of transaction costs and ability to perform “what if” scenarios on excel spreadsheets tend to land constructive discussions with us. The issue on cost savings and efficiencies tend to be easier to dissect, debate and allow for decisions to be made in a timely fashion.
Determine what you need from your new partner, i.e. have a robust set of expectations set from the get go.
Before evaluating potential logistics partners, it’s worth determining exactly what your needs are, and how you expect your new partner(s) to help. Collect data on how your current freight logistics shape up in terms of supply chains, as well as the estimated costs per mile and weight. Also evaluate your current carrier if applicable, and any improvements or extensions that could be made. At the end of the day, the service structure performed by a 3PL is intangible in nature, there is a lot to the process and the art of “reading minds” is not something we at Westset Logistics recommend. The more detailed your initial specifications are, the more detailed process flowchart we can map out. In addition we can provide recommendations for cost cutting from our years of experience. The ultimate goal is to have a win win partnership.
Ask them to show you their data
The logistics world revolves around efficiency and airtight execution. That means any 3PL worth their warehouse should have extensive records chronicling every level of their operation. When you’re evaluating a new 3PL, ask them to show you exactly how their operation can save you money. If you have the data collected in the last step, you can see exactly how it compares to your current operation, and how it will help as you scale your business up. This is when management by walking around applies, our visitors always get a full tour of our facility, there is some level of interaction with the team as well so that the relationship is set right from the get go with all departments. The receiving department right through to picking and packing all have to know exactly what custom requirements are expected. Data of similar set ups should be able to be presented, or at least modeled with an outlay of potential risks, delays and bottlenecks for your specific business. If there is no data available, something is seriously wrong with the operation you are evaluating.
Look at the track record
The bar is set high, both for b2b and b2c also known as online retail. In the Amazon age, consumers expect fast, reliable shipping with little room for error. Look at how your potential new partner will help you back up your promise to your customers. How is their warehouse run? How are they integrating technology to improve accuracy and efficiency? What is their track record like? What about their client history? This applies to financial history as well; your potential partner should be able to prove rock-solid financial stability. If they run into problems down the line, it could cause huge repercussions for your business. At Westset Logistics our string of testimonials provide reassurance to other CEO’s and CFO’s who are looking for a solid 3PL partner.
Conservative CEO’s or CFO’s may or may not consider this one but it’s a significant variable to the decision making process. One of the biggest advantages of outsourcing your logistics is the power to scale your volume without worry. But if your new 3PL is already near their own operating capacity, they may not be able to handle growth on your end. If your volume of orders doubles in the next month, you want a partner that will say, “No problem.” On the other hand, if business is slow, your partner should be able to rapidly scale down without slowing down. Westset Logistics has planned for growth 5 years ago and has been able to grow its facility steadily. Our choice of location was also strategically spotted for this very reason of scaling up for companies like Walmart, Target, Kohls, Pet Products and Fashion items.
Consult reputable industry references
Your standards for a 3PL should be high, so anyone you consider should have rave reviews from current clients. However there are many individuals who claim to know about logistics and 3PL but many fail to understand the fundamentals in working with one. Quiz them at every level from efficiency of receiving goods, cross docking, ease of making changes, how they handle returns. All 3PL’s boast their efficiency, but ask references about security, reliability, and flexibility as well. Your 3PL is akin to another branch of your own business, so make sure their company’s character and culture will mesh with your own. To speak to the above point about scalability, seek out clients that are both larger and smaller than your organization, and ask how the 3PL has handled dips and spikes in their business.
Westset Logistics is one of many 3PL’s in the Los Angeles area but the reason for its’ success to date is service. The Dominguez family has kept this business a very efficiently managed and run business, albeit keeping a strong family business environment. Customer service is mandatory and they have been able to maintain having human interaction for every phone call despite a general trend for 3PL’s to have answering machines and call select options to be part of an unwelcoming phone call gesture for new and existing customers. For more information on Westset Logistics for both international and domestic USA inquiries visit us at www.westsetlogistics.com
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