Brands can choose from a wide variety of third-party logistics companies due to the booming warehouse and logistics industry over the past decade. In port cities especially, you might expect to see a dozen or more 3PL warehouses in close proximity to one another. What criteria should be used to pick a suitable 3PL storage facility for a brand's needs? While there are many desirable characteristics in a 3PL, businesses should also be on the lookout for warning signs as they evaluate potential partners. Here are four red flags for companies to keep an eye out for when selecting a 3PL fulfillment partner.
Not Enough Experience in a Certain Field
Many times, a company has very specific requirements in mind when evaluating a 3PL to outsource their fulfillment.
Top-performing third-party logistics providers (or 3PLs) can serve clients in a wide range of sectors, although most specialize in serving one particular industry.
Many companies are suspicious of 3PLs who claim to be able to meet the needs of any company and are therefore open to partnerships with any company. In response to the tremendous expansion of the logistics sector over the past decade, third-party logistics providers have carved out specialized markets for themselves. Depending on their mission, warehouses might specialize in either horizontal or vertical trade. Some of the most common industries that third-party logistics providers cater to include those requiring cold storage, nutraceuticals/pharmaceuticals, bulk inventory & raw materials, hazardous, wine & spirits, and fashion.
Customized third-party logistics (3PL) providers will attract brands, particularly those with unusual requirements for inventory management, such as cold storage or hazmat shipping. They should look for a fulfillment partner who has extensive experience handling orders of that particular variety.
Lack of or Bad Warehouse Management Technology
Due to the "amazon-effect," the proliferation of online shopping has caused the traditional brick-and-mortar store to all but disappear. And nowadays, two-day shipping is the standard. Tracking inventory has grown increasingly challenging for 3PLs that rely on point solutions or manual processes. Companies are now scrutinizing the technological infrastructure of a 3PL warehouse to make sure it can handle the volume, procedures, scalability, and visibility demanded by the company.
Reputation
While it may seem simple, before partnering with a 3PL warehouse, brands want to check out their reviews and ask for recommendations. Brands looking for a fulfillment partner might benefit greatly from hearing positive feedback from previous customers in the form of reviews or testimonials. An organization that acts as a third-party logistics provider (3PL) is crucial to the success of any brand's customer service and public image.
Pricing/Contracts
Brands choose a 3PL whose price is simple to comprehend and understand. It is recommended to keep your rate sheets as simple as possible to avoid any potential for misunderstandings. If a 3PL warehouse does a good job, its clients will want to stick with them and won't mind being locked into a contract.
In order to help businesses comprehend the quality commitments made by 3PL warehouses, these agreements must be explicitly laid out in terms of error rates and shipping times.
Avoiding the Warning Signs
No third-party logistics provider (or "3PL") is flawless, but with research, references from satisfied customers, advanced tools, and legally binding contracts, you can find some excellent names to work with.
The scope of the global Biopharmaceutical Third Party Logistics (3PL) Market was appreciated at US$ 86.37 billion in 2018.
Growing adoption of automation in manufacturing facilities to reduce operational costs is driving demand for third party logistic services.
Supply Chain Insights Based on supply chain, the biopharmaceutical third party logistics market can be bifurcated into non-cold chain and cold chain.
Others segment includes procurement services, packaging, and custom and duty management.
Others segment is likely to expand at lucrative CAGR over the forecast period owing to rising focus on packaging of drugs in terms of uniformity, shelf life, and purity.
Regional Insights Regional segmentation includes Europe, North America, Asia Pacific, Latin America, and Middle East and Africa.
The global Third Party Logistics (3PL) Market is expected to value at USD 1.24 trillion by 2025.
The 3PL industry is subject to witness a substantial growth due to the recent technological advancement in the various logistics services, rising transportation activities in both developed and developing economies across the globe and increasing shipping demand.
The number of service providers are improving their supply chain capabilities due to numerous growth opportunities available, thereby driving market growth, in the recent years.
Globally, the third party logistics industry is predicted to grow at higher CAGR in the forecast period, providing numerous opportunities for market players to invest for research and development in the 3PL market.
Increasing transportation & infrastructural activates in the Asia Pacific and North America region is anticipated to boost market growth in the upcoming years.
Other application of the third party logistics services include private and local utility sector, healthcare industry, media and entertainment sectors.
