The Four Most Important Factors to Conduct a Successful 3PL Search
There are many situations in which outsourcing your warehouse may make sense, as opposed to running it in-house. Regardless of the reasoning, there are four key items to have organized internally that will drive success in finding the right 3PL for you:
Desired Location. There are many local, regional and national 3PLs. Depending on the market you're looking for, it is wise to have at least a rough area or region in mind before looking. Also, depending on your location, your freight cost may change significantly if there has been no due diligence in analyzing this, and it may defeat any purpose of moving your operation. It's very difficult to limit down the search if you have no idea where the operation needs to be.
Data. A 3PL must be able to adequately quote your business as well as ensure their facility has enough space for your operation. Warehousing-specific operational data, such as inbound load profile, cases/eaches/pallets picked, pallets stored, inventory turns, labeling requirements, and order profiles, are not often tracked in the format the 3PL would like to see. Ensuring this data is complete and clean before starting your 3PL search will minimize surprises and ensure a smooth RFP process and go-live.
Requirements. Before conducing any 3PL search, for warehousing and/or freight management, it is important to gather internal requirements to minimize any friction during the actual search and not waste your time or the 3PL's time. Some requirements to confirm are: insurance, preferred lease term, pricing methodology (fixed/variable/mark-up), EDI transactions, WMS preference/IT integration, freight management, invoicing terms, getting legal's input for the NDA's/contracts, RFP timing and move-in date, etc. Being upfront in the process will greatly improve the quality of the search and minimize surprises.
Determining What Matters to Your Company. As due diligence is done, it is important to gather the internal stakeholders to determine what really matters to you and your company in terms of what 3PL to select. Is it lowest cost? Best location? New facility? Relationship? Growth opportunities? Technology? General comfort? Max flexibility? References from similar businesses? It is remarkably hard to make a decision between competing bids as so many 3PLs are competitive for the business and have great value props. Knowing what's important will help.