When evaluating a 3PL, consider asking the following questions.
Before you sign a contract with a 3PL, you must visit their facility which will warehouse your goods.
Here are some questions to ask:
Are you an asset or non-asset 3PL?
Are you a public or private company?
What is your mission statement?
Can we review your table of organization?
Go to the 3PL warehouse floor itself and review the following initiatives: 5S, LEAN, Six Sigma,Continuous Improvment methods, Safety, Cleanliness, teamwork, and other initiatives that are important to you & your company.
Review the following processes:like, incoming order processing, receiving, dock-to–stock, damage and quality checks, Return Material Authorization (RMA), Inventory Records Accuracy via Cycle Counting, warehouse inventory level management, inventory turns calculation, warehouse picking methodology, slotting , etc.
Are there other customers with your commodity being handled by this 3PL?
Meet and greet the actual warehouse workers in each department. Union or non-union?
How do they measure Customer Satisfaction/Customer Service?
Do they have a VOC (Voice of the Customer) program, for customer feedback?
Review Invoice/ Billing/Audit operations.
Meet their IT personnel. Do they have a Warehouse Management System (WMS), Transportation Management System (TMS) and Yard Management System (YMS)? How will these systems help you save money through Optimization of your freight?
Does their system track imorts from country of Origin to their 3PL location? Is it a good tracking system? See the system itself.
Do they have a Free/Foreign Trade Zone (FTZ) in their facility? Ask to see the area. How many customers use it? (You do not have to pay duty until your goods leave the FTZ).
Names of Top Management should a major problem arise.
Review examples of thir Warehouse Contract/Service Level Agreement and Key Performance Indicators (KPIs).
Do they have public accounts (vs. Contract Accounts).
What is their financial stability?
How much experience do they have managing your type of commodity. Let them give you examples.
Obtain a list of customers you can visit to get their reaction to this 3PL’s service. Only visit a few customers, but the 3PL should not know who you are visiting these few.
Ask,” Why should we choose you as a 3PL partner?”
Can they work with you in a trusting, collaborative fashion? Can you work with them?
How is the total, overall chemistry with this 3PL?
Chuck Intrieri is the owner of Charles M. Intrieri Consulting in Orange County, CA. Chuck specializes in Supply Chain Optimization, Third Party Logistics (3PL) and International Purchasing and Importing Consulting. He also writes for THE GOOD WORD, LinkedIn and other Supply Chain Blogs. He is a guest speaker at the Purchasing Management Association and the University of Wisconsin-Madison. He is certified as a C.P.M.,CPIM, and Value Engineer.