Working with a managed transportation services provider (3PL) is an excellent way for shippers to improve their logistics operation and reduce costs. Choosing the right partner is an important decision – but not an easy one. To help, here are 5 questions to ask when talking to prospective logistics services providers.
- What’s the ROI?
Any company outsourcing clearly expects the solution to be more cost effective than doing the work in-house. Experienced 3PLs will be able to provide specific examples of results they’ve achieved with other clients in similar industries, as well as the quantifiable metrics they’ll use to measure the ROI of your program.
- What level of service can we expect?
Service is every bit as important as cost. Qualified providers will establish and report on KPIs based on the service metrics most relevant to your company. These can include measurements such as on-time delivery performance, OS&D issues, accessorials as a % of freight, or any other data points important to your business.
- Do they have the buying power?
While rates aren’t everything in a managed transportation relationship, they are a common reason companies outsource. Any partner should be able to offer lower rates than what you could negotiate on your own. They should also be able to provide a higher level of customer service and “pull” with carriers to get delivery issues resolved quickly.
- What technology can they offer?
The cost of logistics technology puts it out of reach for many small and medium sized shippers. 3PLs can provide access to TMS technology on a less expensive, variable cost basis. Along with the expectation of cost savings, this is a key point for evaluating potential suppliers.
- How else can they improve your efficiency?
Many providers can leverage their network to provide additional value-add services. Every 3PL’s customer has unique needs, yet many can be complimentary – such as creating opportunities for co-loading or pairing customers to maximize back-haul.
When you select a 3PL it is important to prioritize your needs – and not try to adapt your business to that of a new partner. Asking these questions will help you find the provider that fits your business best and will deliver the results you want.
If you want more information on how outsourcing logistics may help your business and what you need to know when choosing a Managed Transportation provider, grab your free copy of “Return on Logistics – Turning Your Supply Chain Logistics into a Competitive Advantage and Bottom Line Profits” at www.returnonlogistics.biz or write me at miker@4way.com
