Your goods in their hands: what to look for in a new 3rd party warehouse provider
If you’re in the market for a new 3rd party warehouse (3pl) provider, you probably want to operate more efficiently, outsource part of your logistical function, make cost savings or focus more on your core business. Or all of the above.
Selecting a 3rd party warehousing provider is a massively important decision for your business for two key reasons:
a) Entrusting your goods (or those of your customers) to a 3rd party warehouse provider effectively involves handing over assets to an – as yet – untrusted supplier; and
b) The responsiveness and service quality of your 3rd party warehouse provider will have a direct positive or negative effect on your business efficiency.
For these reasons we’ve put together what we think is the definitive list of criteria to review when making your choice of 3rd party warehouse provider:
1. Responsiveness to your service requirements
The single most important element of your 3pl provider’s performance will be the speed with which they respond to your service requirements, execute the required service and complete the order cycle. So make sure there is a watertight service level agreement in place to govern responsiveness.
2. Service quality
Speed of response is key. But it’s not everything. With it must come order accuracy, reliability and consistency – only possible if the processes and procedures are in place to ensure that orders are implemented accurately as well as on time and every time. Look at your warehouse provider’s customers and ask for references.
3. Transport service integration
Depending on their size, many 3rd party logistics companies combine transportation and freight services with warehousing – it makes sense because they go hand in hand. There are benefits to sourcing all these services from a single supplier as long as the same high standards apply to all three. Decide what service your business needs, and if your provider can deliver the others, so much the better.
4. Value added services
As far as warehousing services go, you may also want your 3rd party provider to go beyond ‘just’ basic storage and handling. Ask about additional services such as picking and packing, product assembly, labelling and full inventory management.
5. Values, ethics and attitude
Everyone will say they’re honest and ethical. But really, are they? You’ll need to look for evidence in the experience of existing clients and the attitude of the company’s top management. Often, a partner who is prepared to go the extra mile for you can be the difference between disaster and success – so working with a supportive, flexible, willing and communicative warehouse provider is critically important
6. Sector knowledge and experience
A broad and demonstrable understanding of the workings of different market sectors can be a valuable advantage in the warehousing business. Knowledge of the special requirements for handling and storing of foodstuffs, electrical goods or other sensitive items is as important as knowledge about their transportation. Is this experience important to you? If so find out what experience your potential provider has in your industry.
Your 3rd party warehouse provider operates in a very competitive market. So they must be competitive on price. But even in an industry where margins are constantly getting tighter, price is not the most important factor.
It’s your warehouse provider’s responsiveness, reliability, consistency and flexibility that make the biggest difference to your logistics, warehousing and business operations. That difference is defined not only by cost, but also by value.
Masters Logistical provides flexible warehouse and distribution services to a wide range of businesses that help companies free up capital and focus on the commercial aspects of their business by outsourcing their warehousing and logistics.
Call us on 01353 648222 to arrange a warehouse inspection visit.