Assess Your Goals and Budget
Before you start to actively look for a 3PL provider, outline exactly is what’s important to you and what you can afford. This will help guide the type of 3PLs you look for and the kind of questions you will ask them.
- Do you need 3PLs that work out of multiple locations?
- Do you want a 3PL that you can contact often and performs regular check-ins, or would you like a more hands-off operation?
- Do you need a 3PL that can handle food, medical equipment, or other special items?
Have your priorities in mind so you don’t waste your time during your search
Treat Each 3PL Like a Potential Employee
Although the overall impression you get from a 3PL is important, make sure that you some research. A 3PL will work for you and represent your brand, much like an employee. As such, you need to treat the process like you would hiring an employee.
Don’t shy away from asking difficult questions and follow up on their references. It’s much easier to walk away during the vetting stage than when they have your inventory and process your orders. Do your homework upfront before you invest in a 3PL.
Innovation Should Be Apart of Their Business Model
The world of warehouses, fulfillment, and shipping is always changing. Warehouse technology continues to improve and if a 3PL is not staying up with the latest retail trends and improvements, your business will suffer.
Make sure that your potential 3PL continues to improve their technology and efficiency. Ask them about their latest improvements and innovations. Have they updated their systems recently? What part of their budget is dedicated to technology and innovative practices? These are important questions to ask as you weed through 3PL providers.
Get to Know the Leadership and Staff
Businesses expand, grow, and change constantly. Ensure that your fulfillment is in good hands by assessing the general knowledge of the staff. Check to see how well trained they are. It’s not just leadership that needs to be trained well. A knowledgeable staff contributes to a smooth operation.
Also, ask about succession planning processes. A succession planning process means that business will continue to run smoothly even if key leaders change. If there is a change in management, your business shouldn’t suffer and proper planning on the part of the 3PL will help ensure that.
Do They Have Potential For Growth and Scalability?
You need a 3PL that will continue to grow with you. See if they have the warehouse space for your growth and the capability to scale their workers based on what you need.
Not only will your business grow, but retail is subject to busy and slow seasons. A 3PL should prepare to scale up and handle both your inventory and fulfillment needs during busy seasons. They should scale down as well during the slow seasons (i.e., January and February) to save you money.
Check Their Financial Stability
You want to feel confident the 3PL you select will stay for the long-haul. Many small businesses suffer and even go out of business when their 3PL fails and they must move their inventory and find another in short order. In addition, 3PLs that are at risk for going under may stretch themselves too thin and neglect to give your orders the care and efficiency you need.
Save yourself the headache and potential liability by making sure that your 3PL is stable to begin with. Most 3PLs offer to let you look at their financial documents, but insist on seeing them if they don’t offer. Find their profit and loss data for at least the past 3 years. You need assurance that they aren’t on the verge of financial ruin and prepared to give your business the proper attention.
Ask About Their Disaster Plan
Disasters are becoming increasingly common: the past years saw record-breaking losses from natural disasters. You need to prepare your business in the event of a disaster and your 3PL provider should as well.
Look into their detailed plan should a disaster strike. If they aren’t prepared for power outages, floods, or a labor shortage, take this as a red flag. Most businesses suffer when disaster strikes. The better plan a 3PL has in place, the faster it will be up and running after a disaster.