Bid season is upon us, and food shippers throughout the supply chain are conducting network-wide RFPs to determine their optimal mix of carriers and brokers for the upcoming year. Some are looking to consolidate their current transportation mix, while others are comparing incumbent carriers with alternative options.
Third-party logistics (3PL) providers are playing an increasingly large role in supply chains. While shippers continue to leverage 3PLs for spot loads or as backups to asset-based providers, we’re frequently seeing them choose 3PLs as primary, contracted carriers as well.
A well-matched 3PL can provide tremendous value to a shipper’s supply chain. From finding the right carrier for the right shipment, to executing flawless retail deliveries, to helping them comply with government transportation and food safety rules, it’s important to find a service provider that can take logistics burdens away from a shipper so that they can focus on what they do best: developing, manufacturing, and marketing products. To be considered a core carrier, a 3PL must have the infrastructure to manage recurring, dedicated volume across multiple regions.
But finding the right provider can be a dizzying exercise. With more than 16,000 to choose from, it’s a highly fragmented and competitive industry. Seemingly endless options make it hard to determine which partnerships will leave a positive impact on your business, and which will lead to costly service failures.
So how do you choose the right 3PLs for your business? Below are 10 quick and dirty tips to help you through your next round of RFPs.
1. Make sure they’ve done it before. Don’t be a guinea pig. Make sure your 3PL has a proven track record in whatever capabilities, specializations, or solutions you require; and check that they have a history of successfully managing dedicated volume at a fixed price for a defined length of time. Ask for case studies or references from existing customers, and take note of how they’ve performed on other, similar-sized accounts in your industry.
2. Look for synergies. Find out if they’re already working with any of your suppliers, customers, or competitors. Knowing that your 3PL understands your requirements and has experience picking up or delivering into your facilities makes for an easy transition. Additionally, notice how many of their customers already have freight moving into your geographic locations to determine their capacity strengths near you.
3. Treat a 3PL like a specialty good, not a commodity. Rather than solely looking at price and execution-based services as selection criteria, focus on how a 3PL or broker can bring strategic, value-added operations to your business and reduce your total cost of transportation in the long run. Ask 3PLs in your network how they are different from their competition, and narrow in on those with the execution standards, service offerings, and solutions that align with your company’s goals.
4. Request performance metrics. Find out how a prospective 3PL measures key performance indicators—both internally and externally. From tender acceptance rate, to on-time pickups and deliveries, to appointment scheduling metrics, a good service provider will hold both their carriers and themselves accountable, and regularly share scorecards or reports as a way to benchmark continuous improvement.
5. Get insight into their operations. Find out exactly how a 3PL manages both year-round volume and spot shipments. Make sure they have systematic processes in place for selecting carriers, managing drivers, assigning loads, etc.
6. Ask for documentation. A viable 3PL will have detailed documentation on how they handle products in your vertical. For example, food shippers should ask for documented food safety management protocol. Also take a look at their issue-escalation and contingency plans. If they can’t provide documentation on their processes, it may be time to look elsewhere.
7. Assess their automation capabilities. Can they actually track and trace your product from pickup to delivery? How are temperatures tracked in real-time and relayed back to you? How much of daily operations are manual and error-prone vs. automated? Technology capability is critical.
8. Focus on FSMA compliance. 3PLs play an important role in complying with the Food Safety Modernization Act (FSMA). Although final wording places the onus on shippers, a 3PL can add value by taking care of documentation, carrier compliance, and traceability. When vetting service providers, evaluate their FSMA expertise and find out how they will help you remain compliant.
9. Meet them at their locations if you can. It’s one thing for a 3PL to tell you how they operate, and it’s another to see their operations in action. If possible, pay a visit to their headquarters and observe how they interact with customers. Pay attention to the day-to-day processes they have in place, ask questions, and get a sense of their culture.
10. Don’t get stuck in your ways. As your brand evolves, so will your logistics. It’s important to think proactively about potential challenges your supply chain may face—for example, the enforcement of electronic logging devices, increased “just-in-time” shipping needs, or shifting points of consumption. Make sure you’re working with agile 3PLs that can quickly adapt and scale with you.
Want more like this? Check out this past article for additional tips on choosing your core 3PLs during RFP season. Consolidating Your Network: How to Select the Best Brokers.
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