You’re probably well aware that the key to your success as a company is effective logistics management. But have you thought about outsourcing and does it make sense for you to do so? Making the decision to hire a third party logistics provider (3PL) is not to be taken lightly and necessitates you looking at the bigger picture, including your current products and plans for business expansion as well as your vision for the future.
Outsourcing logistics can be a smart move since it
- Requires less capital outlay and helps to keep control of costs
- Allows you to become more efficient by streamlining your operations
- Gives you freedom to focus on core elements of your business
- Delivers cost effective, finely tuned supply chain solutions with relative ease
- Can enhance customer satisfaction significantly
If you decide to outsource then it’s crucial that you select the 3PL provider which is right for you. In order to do this, here are 4 vital steps to take:
- Create a detailed Request for Information (RFI) – This is probably the most important step and you need to make it as specific as you possibly can, ensuring that it details all of the areas that you’re looking to outsource. At the very least it should include details of the logistic tasks to be undertaken (such as warehousing, distribution, order management, order fulfilment and any other areas); The scope of the contract (including facilities requiring logistic services); Level of volumes involved (such as number of deliveries, warehouse sizes, and total number of items to be shipped); The requirement for a Statement of Performance; and finally, a Request for references.
- Send out your RFI to a list of potential companies –Ask about their capabilities so you can quickly ascertain whether or not they fit your criteria. Be sure to do your homework researching both their technological infrastructure as well as their management systems, from warehouse and distribution to order management.
- Narrow down your list – After you have received the relevant information from all your prospective 3PL providers your company should ideally have a team of multi disciplined staff on hand who are able to review each quote in detail. Your list should ideally only contain providers with experience in your particular industry.
- Choosing your 3PL provider – Finally your management team should select their top 2 or 3 companies so that site visits and interviews can take place. Following this you should be in a position to choose the 3PL provider that fits your criteria and begin to negotiate contracts.