How to pick the best logistics partner: A guide to long-term partnerships for brands and 3PLs
Choosing the right logistics partner is a vital business decision for brands that often goes overlooked. Brands often have trouble finding a good 3PL that fits their business needs and is in it for a long-term partnership.
Why is this a problem that so many brands experience? While the answer is nuanced, it comes down to two important factors:
Brands are poor at discovering 3PLs
3PLs are ineffective at differentiating themselves
What makes matters worse is these factors feed on themselves.
Looking for a logistics partner is hard for brands
Let’s start with the first problem: Brands are poor at discovering 3PLs.
Why is this? Well, for one, there are thousands of 3PLs and it’s a highly fragmented market. By our estimation, there are over 10,000 in the U.S. alone. Unlike many fragmented markets (think sandwich shops), there is no dominant player (e.g. Subway, Panera, Jimmy John’s). One player doesn’t even have 5% market share. All this makes for a difficult task in sifting through the options to find the right logistics partner.
What makes matters worse is that brands aren’t good at vetting or qualifying logistics providers. They do not know the right questions to ask, which is exacerbated by 3PLs not knowing the right questions to ask of them.
How a logistics partner is similar to a marriage partner
Far too many brands believe that finding the right logistics partner is like finding a hotel for the weekend. Something that can be done very quickly, at any hour of the night, by Googling two or three common statements, such as “best 3PL in New Jersey” or “best e-commerce fulfillment company”.
Believe it or not, discovering your 3PL partner is very similar to dating with the hopes of marriage. Most couples date for a while, ask many questions, and get to know one another in great detail, so too should brands and 3PLs get to know each other in detail.
Unlike finding a hotel or Airbnb for a weekend where a quick perusal of images on a website is sufficient, the sourcing stage of finding one’s third-party logistics partner must be thorough and thoughtful. After all, like marriage, the expectation most brand owners have entering a relationship with their 3PL is that it will last for a very long time.
So what questions should be asked during this “dating phase”? Using only monthly volume, SKU counts, and sales channels as primary screening criteria is insufficient. Tying back to the dating analogy, that’s like relying on age and physical attraction as the primary factors in finding a partner. Undoubtedly these are important (volume and SKU count, as well as age and attraction), but if one relied on those two factors alone, the likelihood of a long-lasting partnership is slim. So which other factors are important?
Important factors for a successful logistics partnership
Beyond a brand’s order volume, SKUs, product category, and sales channels, a brand must focus on what’s holistically most important to its day-to-day operations. The culture of your operations should take a front seat when vetting a 3PL. Here are some questions you should ask:
How do you like to communicate?
Do you want email updates, prefer jumping on a phone call, or like to connect via Slack?
What does account management look like to you?
How often do you anticipate using your account manager?
Have you visited the facility and met the team on the ground?
Can you see yourself working with and getting along with them?
If I had a nickel for every time a brand asked who’s the best 3PL in X, Y, or Z city or state, I’d have more than a few dollars in my pocket. It’s not the best way to seek out a 3PL partner because it’s too strong of a filter on the market for discovery criteria that is less important than most brands believe.
Why location isn’t king when choosing a logistics partner
But it’s an easy mistake. In my early days leading supply chain at Birchbox, selecting a partner that was physically close to our HQ in NYC seemed important. Our team felt we needed to visit at a regular cadence and being in close proximity would be integral. It wasn’t until we removed this filter that we were introduced to many more 3PLs, who could perform to our standards, and negated the need to be a short commute away.
If brands limit their search by geography, they are vastly limiting the number of qualified partners.
3PLs often look the same and lack differentiation
Now onto the second problem: 3PLs are ineffective at differentiating themselves.
To save you from visiting hundreds of 3PL websites, let’s cut to the chase. They all look the same and say the same things: “We do e-commerce pick and pack…. We can store your inventory….We offer inventory management.”
Well, of course, they do! That’s like a hotel’s website stating they offer toilets in their rooms or there is elevator access to get to the 8th floor. The stock imagery is all the same with associates holding clipboards standing in front of pallets. There are very few third-party logistics websites that truly inspire, inform, and offer a unique value proposition.
Detecting red flags early on
But then there’s the actual sales cycle and its inefficiencies. Here are a few red flags to be wary of:
Unclear and inconsistent communication
The lack of clear, consistent, and timely communication is a nefarious flaw. Back to the dating analogy, if you start seeing red flags with a 3PL early on, it’s probably not the right fit. Say a brand asks their salesperson or account manager follow-up questions, but the 3PL sits on them for a few days. This could signal that the 3PL doesn’t view the brand and its partnership as important or that they’re too busy to provide the service a brand requires.
Deprioritizing trust and honesty
It’s on 3PLs to create the trust and honesty that brands desire. Most successful calls between brands and potential 3PL partners include a diverse group of roles. Often a salesperson and a representative from solutions or operations are present, and, depending on the size and scale of the 3PL, an executive. This shows brands that they truly matter regardless of the size of their operation.
Poorly managed expectations
Thoughtful communication is an equally important piece of this 3PL matchmaking puzzle. It’s okay to say, “Hey, I don’t have the answer, but I’ll get back to you.” Hopefully, a 3PL isn’t saying that too often, but it’s refreshing to know that they’re seeking out an answer that they may not have immediately at hand. Relationships are often hindered at the start due to poorly managed expectations.
There’s no question that working with the wrong 3PL can be catastrophic for brands. It can cost them customers, future sales, and a lot of money. And the cost of switching providers and barriers to exit are extremely high. Brands should do their due diligence and find a 3PL partner that prioritizes communication that’s timely, transparent, honest, and consistent.
5 key factors to consider when picking a logistics service
When selecting a logistics partner for your business, several critical factors should be carefully evaluated:
Experience and expertise: Assess the provider's industry experience and expertise in handling logistics for businesses similar to yours. Look for a track record of reliability, successful partnerships, and specialized knowledge relevant to your specific needs.
Technology: Evaluate the logistics provider's technology capabilities, including warehouse management systems, order tracking, and data analytics tools. Seamless integration with your existing systems and advanced technology solutions can streamline operations and enhance visibility throughout the supply chain.
Customer service: Choose a provider known for responsive communication, proactive problem-solving, and personalized support. Clear channels of communication and dedicated account management can help address issues promptly and ensure a positive experience for you and your customers.
Collaboration: Look for a logistics partner willing to collaborate closely with your team to understand your unique requirements and goals. Effective collaboration fosters alignment, transparency, and shared success. Seek a provider committed to building a collaborative relationship based on mutual trust and communication.
Pricing: While cost is an important consideration, prioritize value over price alone when selecting a 3PL. Assess the provider's pricing structure, including any hidden fees or additional charges, and compare it with the services and benefits offered. Opt for a transparent pricing model that aligns with your budget constraints while delivering the level of service and support your brand requires.
It’s a two-way partnership for brands and 3PLs
The best strategy for both 3PLs and brands to ensure a successful partnership is to remember it is a partnership—a two-way street. Ask questions, communicate openly and often, and familiarize yourself with each other’s businesses.
Brands should shift their mindset to think of 3PLs as an extension of the brand, not a separate entity. Often, that’s why partnerships fall apart. Brand leaders should visit their 3PL facility. They don’t have to go weekly, but depending on the size and scale of the business, they should go monthly or quarterly to check in on operations. Many brand leaders never set foot in a warehouse. But by visiting their 3PL, brand leaders can gain a deeper understanding and empathy for the logistics work being done.
Finding the right match for reliable logistics and fulfillment can be difficult, time-consuming, and frustrating, and it is not a decision that brands can corner cut. While the market is huge and fragmented, there are many logistics partners to choose from. Take the time to vet, qualify, and evaluate them to stack the deck in your favor in having a mutually advantageous and long-lasting relationship.
FAQs
What is a logistics company?
A logistics company specializes in managing the flow of goods, services, and information throughout the supply chain, from the point of origin to the point of consumption. These companies provide a range of services including transportation, warehousing, distribution, inventory management, and order fulfillment to help businesses optimize their supply chain operations.
How do I find a logistics partner?
Finding a logistics partner involves several steps: assess your needs, research and compare potential partners, evaluate experience and expertise, check reviews and references, request proposals, conduct interviews and site visits, negotiate terms, and finalize the partnership based on alignment with your business objectives and expectations.
