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What to look for in a 3PL provider

Knut Fredrik Ramstad | 30. Apr 2019
4 minutes read

A third-party logistics provider (3PL) is an organisation that can enable businesses to outsource elements of their distribution, warehousing, or fulfillment services. Typically 3PLs combine warehousing (terminal), transportation services and utilise their own and other transportation resources (trucks, etc.). 3PLs span from covering local regions to global operations, and everything in between.

At the beginning of the new millennium, a successful shipping company said the following: “We provide two different services to our customers: movements of their goods and real-time information about these movements”. The awareness of becoming an information provider in addition to “just a keeper or mover of goods” becomes more and more important. The shipping company mentioned above was a pioneer in that regard.

All 3PLs are able to move and store goods, and they are offering performance information (KPIs) to document these capabilities. However, all 3PLs do not consider themselves as information providers. Consequently, if looking for a future 3PL partner, make sure that their offer is as much about information about cargo storage and movement, as it is about the physical handling of goods.

So, what type of information are we talking about?

 

Visibility

Goods on the move constitute assets that are important to its owner. Hence, when outsourcing the handling of goods to 3PLs, the first thing to expect is that they can, at all times, provide real-time information about the goods and the progress of movements.

To make life easy for everyone, this information should be provided electronically, so that there is no need to call someone to obtain status information.

This again means that the 3PL need to have proper information systems to manage the operations, capturing all relevant information (all handling, movements, condition of goods, damages, real-time updated estimates for arrival times, proof of delivery) and making the right information available to you, being their customer.

3PL’s are also using subcontractors. When subcontracting tasks to other carriers, these shall also be able to electronically capture and communicate status information as described above, including electronic proof of delivery.

 

Electronic Bookings

It should no longer be necessary to exchange information in logistics using pen and paper, Excel sheets, pdf files or similar.

If you are a large company, you normally use a form of ERP (Enterprise Resource Planning) system to manage activities. In that case, the 3PL should be able to connect electronically to your ERP system to obtain bookings and return status information. Such connections may either go through an API (application programming interface) or through electronic messages. Only then can information be exchanged automatically between systems.

If you are a small company and are not using ERP or similar systems, the 3PL should offer you a web interface (using a browser) to describe the shipments and consignments, label these properly and issue bookings for logistics services. This way you are entering the booking directly into the 3PL management system.

 

Best possible use of resources

Some logistics service providers (also 3PLs) charge per vehicle kilometer. This means that their clients pay the same amount if the vehicle is full or almost empty. If you are a small operator, this will be an expensive alternative. When it comes to making the best possible use of resources, and therefore, minimising emissions, payment per vehicle kilometer is not necessarily the best alternative.

Your 3PL should offer you a price per logistics unit moved or stored. You should also make sure that the 3PL has the tools and systems necessary to ensure that all vehicles leaving a warehouse or a hub are fully utilised. As a shipper, you are then contributing to making logistics operations as sustainable as possible

 

State-of-the-Art

The capabilities described above are available to those who want to use them. MIXMOVE offer Software-as-a-Service (cloud) capabilities to handle all these issues mentioned. If needed, the MIXMOVE systems can connect to any existing system and complement existing capabilities, thereby preserving investments already made.

 

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