Choosing and Qualifying a Third Party Logistics Provider
- Size of building
- Number of bay doors (enough to ship and receive x amount of containers or trailers per day)
- Close to ports, airports, railways
- Close to major highways
- Available space
- Available space for busy / heavy shipping periods
- Available space for expansion
- Product mix: Complementary to yours? Same busy seasons, or alternating busy seasons?
- Pallet racks
- Flow rack (for pick and pack)
- Scanning stations
- Packing tables
- Carton sealing machines
- Label printers
- UPS/FedEx shipping stations with scales
- Value-added department – specialized equipment for your product
- Testing of employees for reading, writing, comprehension, basic language and dyslexia
- Union or non-union staff
- Temp agency staff or company workers
- Turnover rate
- Education, language and skill level of administrative support staff
- Education and professional level of middle and senior management
- Training procedures for new employees
- Probation periods for new employees
- Background checks of new employees
- Disciplinary procedures for employees found making errors or stealing
- Motivation methods for employees (merit based awards, raises and promotions or seniority based?)
- Computer systems:
- Reporting capabilities
- Integration capabilities
- File transfer capabilities
- Modification possibilities
- What are the shortcomings of their systems?
- What are the shortcomings of your systems?
- EDI and RFID capabilities?
- Strong Inventory control capabilities
- Strong location management capabilities
- Do they provide the necessary range of services?
- Do they have partners or trusted suppliers for services they don’t supply but you will need?
- Shift times
- Overtime when necessary, and cost of overtime
- Weekend work
- Ability to add staff – labor pool
- Ability to handle rush or emergency orders – what is the lead time necessary?
- Who provides what information to whom – both ways?
- What is the time frame for the information provided?
- What is the method of transferring information? (Should always be in written/email form)
- In what format is the information being passed along?
- What information does the 3PL require from you?
- What information will they provide you?
- Review and define jargon and terms to be used.
- What is the 3PL’s experience? How long in business?
- Can they provide references?
- Do they have experience shipping the same product as your company ships?
- Do they have experience shipping to the same customers/consignees as your company?
- What size customers do they handle?
- What kind (corporate types) of customers do they handle?
- Expectations of performance:
- Timetables and deadlines for receiving and providing information
- Timetables for receiving new merchandise
- Timetables for shipping orders
- Expected quantities of inbound and outbound merchandise.
- Expected number of orders and units picked or shipped daily/weekly/monthly.
- What is the division of duties? Review all aspects of information management and flow to determine who is responsible for what (for example: routing, backorders, invoicing, returns, POD tracking, QC inspections)
- What are the shipping priorities?
- Who is responsible for routing, packaging, and shipping guidelines?
- Who is responsible for charge-backs? Under what circumstances? What is the 3PL legal limit of liability? What does their insurance and your insurance cover and under what circumstances?
- Create quantifiable standards and measurements of performance.
- Does the 3PL subscribe to the VCF Clearinghouse and do they use it?
- Price structure that is easy to understand and easy to check
- Invoices formatted to your specifications with proper backup documentation.
- Comprehensive price quote. Include all possible services you may require.
- Payment terms
- Finding a true partner:
- Do you feel they are honest, trustworthy and sincere?
- Do you feel they have a passion for the business and a commitment to customer service?
- Do they have the experience, education, and professionalism you require?
- Do you feel you have found a 3PL that will truly partner with you?