BY STEPHEN T. HOPPER, PE
WHAT DO YOU REALLY NEED FROM A 3PL PARTNER? Before you embark on a 3PL partnership, here are the important questions to ask.
n a previous article (“To 3PL, or Not to 3PL?”, in the January/February 2020 issue of PARCEL), I wrote about some of the high-level pros and cons of outsourcing your logistics operations to a third-party logistics (3PL) company. This “make vs. buy” decision should not be made lightly, and it can be quite stressful, especially for a distribution-intensive business whose competitive advantage hinges on the success of its warehousing and distribution operations. Once you commit to hiring a 3PL, you’ll need to decide what, specifically, you want your 3PL to do for you. A typical 3PL relationship is built on several important moving parts, so let’s dig a little deeper and go beyond the general pros and cons. Before you begin your formal search for a qualified 3PL — and certainly before you sign a contract with one — you’ll be wise to consider each relationship component and explore it thoroughly. That way, you can identify the combination of 3PL services that will best support your unique business requirements. Your Place, or Mine? Your supply chain relies heavily on several important capital assets. Perhaps the most obvious example is the physical facility (the warehouse building and its surrounding yard) at which
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your inventory will be stored and your fulfillment operations will take place. The geographic location of this facility (or of each facility in the logistics network) is usually extremely important because it directly impacts operating costs related to transportation, labor, taxes, insurance, depreciation, etc. In addition to the physical facility, almost every warehousing and fulfillment center incorporates various types of fixed equipment, such as storage racks and shelving; conveyor, packing, and unitizing equipment; and workstations. It usually requires various types of powered and unpowered mobile equipment, such as industrial trucks (forklifts, orderpickers, etc.), pallet jacks, and carts. And physical automation, such as sortation systems, industrial robots, and goods-to-person picking systems, is becoming more and more common in warehousing because it can offer a compelling business case. Plus, many logistics operations rely on capital equipment that operates outside the “four walls” of the warehouse. These may include owned or leased vehicles (tractors, trailers, trucks, vans, etc.) that deliver products to customers. The question here is, who is going to provide these capital assets for your fulfillment operations? In most cases, the 3PL partner includes them in their contract, but some 3PLs are willing to run your logistics operation using assets you own or
PARCEL Mar/Apr 2021