For small businesses, third-party logistics providers can be an absolute godsend. When orders are turning up late, quotas aren’t being met, and the chaos of it all is harming your brand, outsourcing your logistics to another business could be the quick fix to all your problems. However, like anything in business, it’s not as simple as that. I’ve read about countless third-party procurement train wrecks, which have driven promising businesses into the ground. This should sound like your worst nightmare! Before you start reaching out, be sure to read these important considerations for any third-party logistics services.
If there’s one good quality you should be looking for in any logistics provider, it’s their support of all the businesses which are involved in their supply chains. This should come right at the top of your list of criteria, especially if the provider is fairly new and unestablished. If you’re a retailer, like a lot of small business owners, you need to make sure that all your prospects are serving other retailers, and have had several trouble-free years of similar operations. You may get some pretty appetising quotes from suppliers who have only worked for B2B businesses in the past. Don’t get taken in by them! The retail arena is completely different to the secondary sector. If you expect these logistics service providers to learn as they go along, you’re certain to run into trouble. Furthermore, if you’re running a business that’s strictly ecommerce, you’ll need to find a provider that has a proven track record for working with ecommerce businesses. When you’re looking for a fulfillment warehouse to suit your needs, don’t neglect to look through the history of their work.
The quality of a provider’s interface and systems is also an important consideration when you’re looking to put your logistics in someone else’s hands. This has always been a big factor in choosing a logistics company, but now that we’re seeing omni-channel commerce platforms pop up everywhere, it’s even more essential to think about. More channels and locations means we need more distributed order management, in short. A third-party provider’s order management capabilities are important, so be sure to stick your nose in when you’re looking into prospective services. However, all of this should come after the first item on my list. The service provider has to have solid, tested systems in place for both B2C and ecommerce capabilities and B2B outlet distribution. The operational processes for these two business models are very different, and as such they require different systems to make them really work for you. Just because the provider has proven to be great in one doesn’t mean that they’ll perform as well in the other.
Another thing you should be looking for in a third-party logistics company is the measurable and ongoing improvement of their service. The company will have passed the first test by getting the winning bid. The on-boarding and start-up phase will be a little shaky, as expected. From then, the logistics provider should always be looking for ways to improve the service you’re getting from them, and steering around any potential cost rises. This culture of constant improvement should be a given for any good businesses, right? I hate to be the one to tell you, but not all third-party logistics businesses were created equal! If you’ve got a deal going with a logistics provider right now, and you haven’t seen any significant improvement, then you may be hurting your business by not finding another one. When you’re just opening up the request for proposal phase, you need to talk to all your potential logistics providers about the future of their business. Ask about their continuous improvement programs, and how this will affect your business with them later on. How many ideas for continuous improvement have their workers submitted? How many of these were actually put into practice? What were the measurable positive effects of these changes? If they scramble to come up with figures, or answer with vague rhetoric which isn’t backed up by any evidence, move along. A good third-party logistics provider will always be improving, and eager to show you what this has done!
Finally, look for a wide scope of services in your next logistics provider. Having experience with B2B or B2C operations is a given, but providing too many different services to count is the sign of a true winner! There are a number of logistics-related services which your business may end up needing, and having a lot to choose from will allow you to stay flexible with the same provider. Marketing and point-of-purchase supplies might be part of their services. Product pallet displays, storage, loading, picking and packing materials may all be part of the package. Point of sale systems receipt, along with the installation of this kind of hardware in physical stores and reverse logistics may also be up for offer by some logistics providers. Some will even offer you technical support for your POS equipment, and related hardware like PCs and receipt printers. Call centres are another little-known service which you can get from third-party logistics providers. Even though it’s 2016, a lot of people can’t figure out ecommerce sites. Similarly, a lot of small business owners can’t figure out how to build a high-functioning website! Whether it’s technical hiccups like these or issues with the product, all ecommerce businesses should have a call centre as part of their business model. You may have pretty meticulous standards, and want to spread all of these services out over several third-party providers. It’s your business, but you should at least consider synching them all up with one provider. This will cut the cost of transportation, miss-directs and damages by consolidating it within a single provider. The simplified billing is a plus as well!
When you’re looking to outsource your logistics, keep this list in mind and take your time to really scrutinise potential providers. When you’re checking them against this list, you’ll quickly realise just how much of a difference the choice can make.
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