Hiring 3PL Providers
To save on expenses, manufacturing and import/export companies typically hire third-party logistics providers (3PL providers). They do this because these 3PL providers can execute coordination, consolidation, distribution and order fulfillment more efficiently and effectively. Logistics providers usually have greater expertise than the manufacturer or seller, and have more access to global networks.
3PL providers are usually able to handle logistics for any sized business and most often have expertise in a specific industry or sector. They are solely logistical experts, who can help improve service, enhance supply-chain management and even positively impact procurement teams. They specifically offer customized, scalable assistance with integrated operations, warehousing and transportation services.
Choosing to hire a third-party logistics company can be a challenge. Losing control of a portion of your product’s life cycle will be an important decision which should not be taken lightly. The choice also depends on a variety of different factors, like future business objectives, product lines, acquisitions, potential expansions and much more.
Types of 3PL providers
The types of 3PL providers are most often in one of these three categories:
- Asset Based
- Management Based
- Integrated Providers
3PL providers who are asset-based usually use their own trucks, warehouses to fulfill logistical needs. Management based companies typically do not use their own assets to support logistics, but they offer technological and managerial functions for their clients instead. Integrated providers are a combination of the other two and will supplement their services with whatever else is needed.
The selection process
When you are in the process of selecting a third-party logistics provider, you must be prepared to fill out an RFI (request for information) or RFQ (request for quotation). These are standard documents which should allow you to add as many details as possible with your request and will usually include:
- Scope of Contract (the locations, facilities, departments, etc.)
- Information on volumes involved (the number of items, deliveries, warehouse sizes, etc.)
- Specific logistical tasks to be performed (warehousing, transportation, etc.)
- Required levels of performance
A selection team reviews each of the bids based on certain criteria and will give each bidder a score. Management will often select a few companies for site visits, interviews, and detailed reviews of financial records. Once a company has been identified, contract negotiations will take place prior to reaching a final agreement.
AECI is a third-party logistics provider which offers diverse contract warehousing and fulfillment services. We will learn your specific needs so we can provide customized solutions for your business. Our flexible contract arrangements, automated solutions, and “personal touch” have provided our clients with an outstanding experience. Contact us today for more information on our services.