Is 3rd Party Warehousing a Good Fit for My Company?


A marriage always seemed like a good analogy for the relationship between a 3rd party warehouse and it’s customer: a partnership between two entities based on trust and mutual benefit. But like many marriages, the decision to integrate your interests is sometimes made hastily, and based on the wrong criteria. Like your potential mate’s appearance, price is often the main focus of a logistics partnership, and over time this proves to be insufficient to hold the relationship together. Unfortunately, many of the cracks in the relationship do not become apparent until you are so deeply entangled that separation can be painful and expensive.

During the courtship phase, everyone is on their best behavior. There is nothing the 3PL won’t due to please the customer. The customer will never ask the 3PL to stay even one minute past five o’clock to get a shipment out. Next thing you know, the floor is littered with dirty underwear and the air is filled with “you don’t love me” and “why are you such a nag?”.

So what will improve the odds you will be happily “married” to your 3PL for many years?

Know Thyself

This is probably not the answer you were looking for, but this is the absolute starting point. Until you understand why you want to outsource your logistics functions to a 3rd party, you will never achieve an optimal solution. Until you understand what you actually have in inventory and why you have it, you will never be able to maintain a lasting 3PL relationship.

So here are some starting point questions you can begin asking:

  • What am I trying to accomplish? “I just need more space” is not an answer. Why do you need more space? Do you have too much, or the wrong kind of inventory? Is your need seasonal or long-term? Are you trying to locate inventory closer to your customer or improve service in a specific location?
  • What do I need to store? Be specific: number and quantities of sku’s, measurements andweights of each item. How will the product come in: will it be floor-loaded or palletized? How will it go out: LTL, small package, truckload? How many sku’s per order? How will the orders be communicated?
  • What services are required? You may not think you are high-maintenance, but you probablyare, so let the 3PL know up front what you will need. Online inventory, daily shipping and receiving summaries, repackaging, special labeling, stretch-wrapping, EDI, barcoding. The tendency is to not communicate these needs so you won’t overwhelm the 3PL (or so they will not overcharge you), but trust me, it is better to lay out the entire story up front.
  • How do you want to be treated? I know that sounds weird, but everyone has a different level of “need to know”.
    How often do you want to be “touched” by the 3PL? Some customers call almost hourly to check in. Some come by to look at the warehouse and sign the contract and never set foot in the building again. Is your 3PL comfortable with that level of contact? The bottom line, is that the more you understand your own needs, the more likely you are to find a 3PL that can meet those needs.

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