Shippers continue to follow the trend of outsourcing non-core competency activities to third party logistics partners as it can provide significant benefits such as cost reduction and higher customer service levels. Finding a 3PL partner that is able to meet all of your business needs is not a task to be taken lightly as they are truly an extension of your business. The process of searching for and selecting a third party logistics partner is one that must be structured and detailed to ensure that the best decision is made for your business. Many shippers choose to utilize a request for proposal (RFP) to assist in keeping the decision making process structured. A major portion of the selection process, whether an RFP is used or not, is clearly defining the criteria that must be considered when making the final decision. The top factors to consider include: -service capabilities – match your required services with their capabilities and eliminate those providers that cannot meet all of your needs and be sure to communicate these needs clearly -flexibility/scalability – a “one size fits all” solution will not be best for your business – find a 3PL that will meet your needs now and is able to grow with you in the future -3PL reliability – ensure customers receive only the highest level of service – your 3PL must be able to meet and exceed customer expectations -cost – this should not be the only factor considered, but do ensure your 3PL can effectively manage costs, passing savings on to you -geographic location – strategic facility locations will allow you to better meet customer needs – a developed geographic profile will allow you to expand nationally, and in some cases, internationally -information technology capabilities – technology has now become a necessity – ensure your 3PLs software is easy to use and provides real-time data so you can adapt and make quick decisions -corporate culture – in order to build a strong and effective partnership both parties must understand one another’s corporate culture – this affects how you run your business and how you will need your 3PL to perform in turn -corporate stability – consider the financial standing of your 3PL partner when making your choice – be sure to protect your assets To learn more about selecting the best 3PL for your business contact Wavelength Logistics experts today at marketing@wavelengthlogistics.com or at 855-645-2766.

1. Criteria for Selecting a Third
Party Logistics Provider for
Your Business
By Angela Cox

2. Why Outsource to a 3PL?
“3PLs introduce efficiency and effectiveness into a company’s
operations, allowing shippers to conserve costs and resources, while
also helping to provide higher service levels”
-John C. Langley, Professor of Supply Chain Management, Georgia Institute of
Technology

3. Factors to Consider
• Service Capabilities
• Flexibility/Scalability
• 3PL Reliability
• Cost
• Geographic Location
• Information Technology Capabilities
• Corporate Culture
• Company Stability

4. Service
Before searching for a 3PL provider, develop a list of “must have
services” and “wanted services” with your key team members.
Compare this list with the service capabilities of potential 3PLs to
eliminate those that do not perform the necessary functions.
Take into consideration how well these services are performed. The
purpose of outsourcing to a 3PL is to improve your current
operations. Outsource only those services that the chosen 3PL can
perform better than your business.
Communicate your expectations and needs to your 3PL clearly so
that there is a mutual understanding.

5. Service
Ensure your 3PL can also effectively handle exceptions and
emergencies such as:
• Custom packing requirements
• Short-notice orders
• Recalls
• Sensitive inventory items

6. Flexibility/Scalability
Do not settle for “one size fits all” solutions. Select a 3PL that has the
capabilities to meet your needs now as well as in the future.
Your plan is to grow your business and your 3PL must be there to
help, not hinder. Evaluate their capability to adapt and scale:
• Warehouse space
• Workforce size
• Service portfolio
• Technology
• Infrastructure
Ask 3PLs for an example of an instance when they provided
customized solutions to meet a customers needs. This customer
should have similar requirements to yours.

7. Reliability
As an extension of your business your 3PL must be able to guarantee
your customers will receive the same, if not higher, service levels
when handling inventory and fulfilling orders. Finding a trustworthy
and reliable 3PL will help retain customers and increase customer
loyalty.
When selecting a 3PL request customer references from businesses
similar to your own. A third-party, objective opinion is helpful in
determining the reliability of the 3PL.
Also take into consideration the customer retention rate of that 3PL.
This will speak volumes about the reliability and consistency of
service.

8. Cost
Although cost is an important factor in the 3PL selection process, do
not make your selection based solely on this factor. Determine what
your decision drivers are and select the 3PL provider who can offer
the best combination for you.
Also ensure your 3PL effectively manages cost. As an extension of
your supply chain they are responsible for cost reduction both short-
term and long-term. Understand how the pricing structure will apply
to your operation before making a decision.

9. Geographic Location
An effective 3PL partner will have a strong geographical profile.
Search for a provider that has facilities located in the strategic
locations that will best serve your customers.
Consider future growth when looking at the 3PLs geographical profile.
Does your business plan to expand nationally or globally and will your
3PL be able to handle this expansion?

10. Information Technology
As markets become more competitive, many 3PLs are investing in
technology to better meet shipper needs and reduce costs.
The most commonly used technology for 3PLs include:
• Warehouse Management Systems (WMS)
• Transportation Management Systems (TMS)
• Electronic Data Interchange (EDI)
• Mobile Solutions (Mobile Computing Devices)

11. Information Technology
Compare your list of “must have services” and “wanted services” to
the 3PLs current technological capabilities. Can they handle all or
most of these services?
Also consider the ease of use and information accessibility of their
software systems. Make sure that the 3PL you select can provide you
with the reports, documentation and real time inventory visibility that
you need to manage your business. Knowing the status of orders,
on-hand inventory and other information will help your business
adapt and respond to situations more effectively.

12. Corporate Culture
The cultural fit between the shipper and 3PL will play a large part in
whether the organizations and their representatives will be able to
efficiently and effectively work together.
Asking questions now will help determine if the 3PL is able to
understand and manage your expectations.
Here are some examples of questions to ask:
1. Can you provide an example of a time when you invested in
updated infrastructure to better meet an existing customer’s
changing needs?
2. Please explain a case where one of your customers
encountered an issue and your staff was able to resolve it.
How did they resolve it?

13. Corporate Culture
Cultural fit will be a consideration of both the shipper and the 3PL.
In some cases, 3PLs will decline bids if they are aware they cannot or
are not willing to meet expectations of the shipper.
When considering corporate culture, ask yourself “Would I feel
comfortable working for this 3PL and why?”

14. Company Stability
Inquire about the financial standing of the 3PL to determine financial
stability.
Look into issues such as:
• Status of outstanding loans
• Recent profit statements
• If publicly owned, dividends paid to stockholders
Protect your assets by negotiating and developing an agreement that
will ensure the safety of your product if the 3PL goes out of business
for any reason.

15. Contact Us
(855) 645-2766 Web chat