So you’re considering outsourcing your warehousing and/or distribution. When you look at 3PL (third-party logistics) providers, factors to think about include a provider’s location, scalability and size. However, whether a 3PL provider is big or small depends on features such as how much warehouse space it has and how many services it offers. Furthermore, whether you need a big or small service depends on your situation. Here’s how to determine the 3PL provider you need.
Typical Ways to Determine 3PL Provider Size
Square feet of warehouse space: If you need plenty of storage room, then square feet of warehouse space is a good way to determine the size of a 3PL provider. As the cost of handling space yourself increases every month, you stand to save a lot of time and money by renting space in third-party facilities. In fact, many agreements call for you to only pay for the space you use and only when you use it. It’s a great benefit for seasonal or rapidly growing businesses.
Number of employees: How many employees a 3PL company has is important for several reasons. First, more employees often means more services and even one-on-one attention. In addition, if you plan for your business to grow, you need a 3PL provider capable of handling your needs. When you talk with potential providers, explain your plans for the future, and ask how well-equipped the provider is to handle them. However, just as important as the number of employees is how automated a 3PL provider’s processes are. Automated services mean more same-day processing and more on-time deliveries.
Services provided: Do you need to ship internationally? A big 3PL company is more likely to be able to offer this service, although always ask to make sure it has lanes to the countries you work with. In addition, many companies are turning to value add-ons, such as product assembly and order fulfillment.
Advantages and Disadvantages of Big vs. Small
Specialized Service: If you need specialized service, you may be better off with a smaller company. Many tend to specialize in areas such as mode or region. On the other hand, if you want add-ons, such as pre-assembly, a bigger company might be in better position to help.
Cost: Some bigger 3PL providers may have economies of scale that can result in lower charges, but at the same time, they may be more rigid in their pricing structure. Smaller 3PLs often have more flexibility to structure charges in a way that is more tailored to your needs. Also, a 3PL may be huge on the West Coast, and still not serve the areas on the East Coast that you need to reach, or serve them as quickly.
Want more information on how to select a 3PL? Call Buster today at 336-275-8458 or email blewis@lewislogistics.com to talk about third-party-logistics!