It’s a question many companies face, especially when it doesn’t make sense to allocate precious resources to a process that is not part of the core business.
Yet, turning over supply chain functions to a third party logistics (3PL) provider takes a lot of trust. However, the end results make it all worthwhile in terms of enhancing company profitability and effectively meeting customers’ needs.
So how do you get started in deciding whether to outsource your logistics to a 3PL provider? Here are some guidelines to help you decide if outsourcing logistics is right for your company.
Analyze Key Performance Indicators
Before deciding whether a 3PL vendor is the best route to take, conduct an analysis of key factors, such as the cost of your supply chain operations, a cost comparison of in-house versus outsourcing, and the financial impact to the company and its stakeholders.
Also analyze the performance of your current supply chain and any gaps or challenges that are costing your company money. The analysis should also include suitability aspects of outsourcing with respect to your supply chain strategies.
Get input from others in your organization, such as key staff members from operations, sales, and accounting.
Outline Your 3PL Expectations
After conducting an analysis of your key performance indicators, outline what you want to achieve by using a public warehouse with 3PL services. For most businesses, it’s one or more of the following reasons:
- Reduce costs
- Increase revenue
- Enhance capabilities.
However, companies may have different objectives within these main reasons. For example, when it comes to reducing costs, one business may want to reduce operating costs or lower development costs, while another may want to reduce capital investment or meet downsizing goals.
Likewise, a company may want to increase revenue to gain supply chain flexibility and responsiveness, while another business may be looking to increase the speed to market or decrease customer response time.
Using a 3PL to enhance capabilities may mean gaining access to new technology in a more affordable way for one company, but for another, it might mean creating additional or backup capacity.
Identifying your goals for 3PL services will help in your conversations with 3PL companies and in making your decision on which 3PL to choose.
Decide How Much of the Supply Chain to Outsource
A 3PL contract can be customized to meet your needs. Most public warehouses have extensive logistics services and can design a supply chain process to complement your existing structure.
You may choose to outsource certain aspects of your supply chain functions, such as warehousing, order fulfillment, distribution, and reverse logistics, or outsource the entire supply chain operation.
Resolve Any Preconceived Notions about Outsourcing
It’s only natural for a company to have concerns when outsourcing business functions. For example, you may think outsourcing will be more expensive, that customer service levels will drop, or that you will lose control over your business.
It’s important to resolve these concerns before transitioning to outsourcing. When interviewing potential public warehouses, be sure to discuss your concerns and expectations so they can be addressed within the structure of your contract agreement.
Choose a 3PL Public Warehouse
An evaluation criteria checklist is helpful when choosing a public warehouse. The checklist should consist of identified functions, such as procurement, warehousing, order fulfillment and processing, customized packaging, transportation management, etc., that you want the 3PL company to handle.
Under each function, identify all processes, such as inbound inspection, picking, tracking, and reporting. Next, develop evaluation protocols, such as product knowledge, customer interaction, service level, distribution response time, etc.
Match your list with each of the public warehouses you are considering. In particular, evaluate the logistics provider’s facility infrastructure, technology, equipment, and personnel to determine if they can handle the scope and scale of your supply chain needs.
The goal is to determine if the 3PL vendor can execute your supply chain processes seamlessly, effectively and efficiently.
Outsource to Brendamour Warehousing
We know setting up your supply chain operations with a 3PL can be challenging at first, but in the end, it will be extremely rewarding for your business. But at Brendamour Warehousing, Distribution & Services, we have measures in place to make the transition an easy and stress-free one.
At Brendamour, our business is ensuring the success of your business, so we strive to be a vital partner to your business operations. Get in touch with us to learn more about our warehousing, distribution, and logistics services and how we can tailor them to meet your supply chain objectives.
By outsourcing your logistics processes to Brendamour Warehousing, your company will be able to focus on its core business with the peace of mind that your goods are being supplied to your customers in an efficient, accurate, and timely manner.
And your bottom line will reflect the rewards, with cost savings and high customer satisfaction rates.