Behind every timely, successful delivery is a meticulously crafted supply chain; un-disrupted, highly efficient and cost effective. At times, the equation involves a third-party vendor, for a particular service, a bundle of services, or for all logistic requirements in some cases. To choose the right 3PL partner, businesses often rely on referrals and a solid track record. And usually, the process involves vetting qualifications, laying out T&Cs and eventually enforcing involvement in the supply chain.
But that’s never enough. And it’s not as easy.
Before getting down to negotiations, there are always several questions that pop up: Is this the relevant choice? Will this disrupt the supply chain? Will the investment be worth it? Signing a contract with these loopholes might end up in a conflict of interest, and cause you some major setbacks in the longer run. Furthermore, choosing a 3PL partner requires a holistic approach in order to ensure great value addition. It’s not only about who you choose, it’s also about where they fit in the picture.
Therefore, Adrian Chen, Advisory Board Member (APAC) recommends the 5C’s principle to help assess if your company is making the right choice, while dispelling all uncertainties in the way:
Choosing the right partner begins with outlining all the areas of opportunity, and officially recognising the need to contract a 3PL partner. There can be no third-party negotiation without an authorized requirement from the company.
For best results, get all relevant stakeholders into the discussion – IT, sales/marketing, purchasing, legal, and finance departments to assess shortcomings and project growth with the third-party involvement. Have an agreement in place, before development of a value proposition.
Now that you have established company willingness, do you and your prospective 3PL partner share the same values, ethics, and priorities? Similar capacity in terms of resources? If yes, then look forward to a fruitful, long-lasting partnership.
Your 3PL partner must be inclined and capable of seamless co-operation and collaboration across business units and the various divisions in your supply chain, up until fulfilment of all the orders.
At the crux of all great partnerships is great communication. In fact, all your collaborative efforts will see complete fruition only with effective communication, and management of relevant data. Inquire if your partner is equipped with the right inventory to analyse and relay timely information, to all the stakeholders within the supply chain, both at your end and theirs. This helps maximize cost efficiency and reduce associated OPEX (operating expense) at all stages.
While the former 3 Cs help you efficiently stitch the 3PL partner into your supply chain, the latter two Cs aid in the vetting process.
Has your prospective partner been consistent? Do they have a proven track record? Will they ensure consignments get delivered at all costs? More importantly, are they financially stable? Can they scale up operations when required at a local/global level? These are the questions you need to be asking at this stage of the assessment.
What is the best way to vet a company? Proof of evidence.
If your 3PL has multiple long term clients, it’s a great sign of affirmation. If your partner has multiple long term vendors they work with, it’s even better. Look out for testimonials, and evidence of solid partnerships with distributors, and global end-consumers alike.