How to Choose a Third-Party Logistics Company For Your Business

Most businesses excel at manufacturing quality products. However, they often experience supply chain problems due to poor market research, inadequate resources and poor technology. The best way to overcome these problems is by hiring a third-party logistics (3PL) company to manage all aspects of your supply chain.

Below are a few considerations to make when hiring a 3PL company. 


Work with a reliable company. Engage with the company's management to determine if they are interested in long-term partnerships with your business. If you hire an incompetent firm, you could lose customers and damage your brand due to poor service provision. 


Work with a company that understands your business. If you own a restaurant and need the 3PL company to deliver food to customers, the company must understand the food industry. For example, customers do not want cold food; hence, orders must be delivered in the shortest time possible.


The third-party logistics company must have sufficient resources to handle your operations. Evaluate the amount of storage space available in the company's warehouse vis-à-vis your production capacity. The company should also have sufficient vehicles and personnel. 

Examine the company's financial records to determine its ability to handle your operations. Remember that the 3PL company will have to fuel vehicles and pay personnel before you make your payments. Therefore, choose a company with sufficient operating capital and long-term partnerships with financial institutions. 

Level of Technology

Today, technology is the driving force behind effective third-party logistics. Technologies such as Electronic Data Interchange (EDI) and transport management can significantly improve the service provided. Some 3PL companies have state-of-the-art warehouses where they use robots to ensure 24/7 operations.  

The internet has changed how businesses run. For example, a customer will order a product from your website or mobile app and expect it delivered in hours. The 3PL's software must be compatible with what you use to ease order tracking and ensure timely deliveries to the customers.  


Another of your considerations should be the company's pricing strategy. Ask for quotes from a few service providers. Inquire about extra costs such as inspection, customisation and handling returns. Preferably, the company should charge per unit or hour, depending on the service you require. They should also allow you to renegotiate the initial price as you expand your operations. 

As a rule of the thumb, bind your agreement with a contract. Engage your lawyer to protect your interests and avoid unnecessary liabilities.   

A 3PL will significantly improve your business operations. Choose a reliable company with sufficient resources to take your brand to the next level. 

430 Words

About Me

Building a Better Business Hello! My name is Karl and this is my new blog. On this blog, I will be talking about the various ways in which you can grow your business. I should point out that I am not a business-owner myself but I do one day hope to be able to set up my own shop. In preparation, I have been paying a visit to various local businesses so I could find out how they operate and what makes them successful. I have learnt lots of very cool things which I would like to share with you. I hope you find my blog useful.