This is the first of a two part series that will give business owners the information needed to know to avoid making costly mistakes when selecting or evaluating 3PL partners for third party logistics. In Part One of this article, we will focus on four of the nine biggest risks. The five remaining risk factors will be covered in Part Two which will be the subject of our next blog/warehousing post.
Don’t let any of these potential problem areas with a supply chain partner or potential provider eat into profits and alienate customers. A weakness in any of these areas could create issues with 3PL logistics that will negatively impact your business.
1. STAFF EXPERIENCE
When choosing a supply chain partner for third party logistics, factor in the overall breadth and depth of experience within its staff. The amount of knowledge and expertise in warehousing and transportation among this potential partner’s management team and staff as a whole can have a significant impact (positive or negative) on business.
If that potential partner has a less experienced staff, some of the problems that could come up include:
- Lower levels of efficiency
- Higher expenses
- Increased errors and mistakes
- Missed deadlines resulting in ASN failures and fines
- Miscommunication and slower response times due to a lack of understanding your specific needs and requirements in detail
2. INFORMATION TECHNOLOGY
Now more than ever, information technology plays a crucial role in third-party logistics. Carefully consider the in-house IT capabilities of any potential partner.
Working with a 3PL logistics provider that has not kept current with the latest technology may results in any number of problems, including:
- Inability to implement Product ID tags
- Inability to perform RF scans
- Limited or non-existent EDI capabilities
Business owners want and need accurate real-time information formatted the way they want it, when they want it. Organizations need the ability to receive automated reporting from the supply chain partners in the organizations format for the systems! Anything less only makes life harder than it needs to be.
3. ONGOING TRAINING
Any third-party logistics firm needs systematic, fully documented procedures for the ongoing training of its staff. Documented training is vital to areas such as general health and safety regulatory compliance, as well as maintaining the necessary certifications for Haz-Mat storage and transport, as well as food-grade warehouse services and transport.
Ongoing, documented training is also vital to a 3PL’s ability to meet its customers’exact specification and requirements. Working with a 3PL logistics provider that lacks a fully documented customer-specific training program, means that an organization is at risk of wide fluctuations in the quality of service received from the third party logistics provider.
If there is no written documentation or training materials specific to an account, mistakes and errors will result when there is absenteeism or turnover in the team handling their account and other members of the third party logistics partner’s staff have to perform unfamiliar tasks and procedures.
Having an ongoing, documented training program that includes customer-specific training indicates that a provider is always prepared and best equipped to provide consistent levels of service on a continual basis.
4. SAFETY AND COMPLIANCE
Warehousing or third party logistics partners should have a safety and compliance program. A safety and compliance program is vital to complying with all general health and safety regulations, as well as maintaining certifications for Haz-Mat storage and transportation as well as food-grade storage and transportation.
In addition, a safety and compliance program will help ensure compatibility issues don’t arise during warehousing or transport. For example, separating chemical warehouse areas from food (or food additive) warehouse can reduce/eliminate cross contamination risks.
FW Warehousing is headquartered in St. Louis, Missouri with Midwest warehouse distribution centers in Kansas City, Indianapolis and St. Louis totaling more than four million square feet. Founded in 1949 with a focus on food-grade storage, FW later broadened its services to include contract warehousing, dry storage, hazardous material and chemical storage, temperature-controlled storage, product distribution and B2B and B2C fulfillment.
FW Warehousing has more than 50 years of experience in third-party 3PL logistics and has been ranked in the top 100 Third Party Logistic Companies in the country by Inbound Logistics magazine.
For more information about FW Warehousing’s 3PL logistics capabilities, visit the 3PL page of the FW Warehousing website.