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Logistics Update

How A 3PL Can Save Your Small Business Money

grow your money

Shipping is the second-largest cost that small businesses face, the first being labor. When facing the competition of bigger businesses companies need to do everything they can do to keep costs low and create a competitive advantage all while moving their products from Point A to Point B.

A way to cut costs without cutting quality is to contract with Third-party logistics Company (3PLs) providers. 3PLs have existing relationships with multiple transportation carriers that give them the advantage of competitive pricing and allow them to handle tasks such as shipment execution, tracking, billing, invoicing, and auditing.

While 3PLs are great at cutting hard costs, they are just as good as cutting soft costs including decreased labor, reduced need for working capital, and access to transportation management systems (TMS).

DECREASED LABOR

Any business who handles their own shipping has a designated department that often requires several employees with additional labor as the demand for the product grows. Hiring a 3PL to handle shipping eliminates the need for multiple positions, bundling all the jobs into one system. Everything from auditing shipments for quality management, consolidating multiple invoices, claims management, to detecting shipment problems.

3PLs can cover the claims management sector which allows them to; settle claims for compensation, restitution, and repayment for damages suffered during the shipping process- all without disrupting the flow of business.

3PLs can also save small businesses time by researching multiple carriers. Whether requirements are based on the size of the shipment, the time frame the company is working around, or the shipment’s location/destination, 3PLs provide services to narrow the search and find the most cost-effective option.

Third-party logistics providers often have the technology and resources to simplify shipment tracking. They provide real-time cost and transit time comparisons—along with immediate online access to invoices and bill payment—making it easier for small businesses to track and trace their shipments.

3PLs allow small businesses to focus on their core competencies rather than their complex shipping needs. While saving money and helping them to increase their overall revenue in order to continue to grow their business doing what they do best.

Harris, Bobby. “3Pls Can Provide Soft Cost Savings For Small Businesses.” Inbound Logistics. (2013): n. page. Web. 20 Aug. 2013. www.inboundlogistics.com/cms/article/3pls-can-provide-soft-cost-savings-for-small-businesses.

Customer Service From Your 3PL

Service
Outsourcing logistics can be hectic and stressful, especially when you deal with a provider more interested in the next shipment rather than the one en route.

Imagine a third-party logistics provider (3PL) that does whatever it takes to fix shipping problems, believes there is no such thing as “just a transaction,” and whose drivers are happy to go the extra mile for your customers. Imagine a company that believes every delivery involves a shipper and a receiver— and a chance to build a trusting relationship and future transactions.

GO FOR THE GOLD

Sound like a dream? It’s one that can come true— with a 3PL company that employs ‘Golden Rule’ customer service. This means its staff treats others as they want to be treated, from customers to other internal employees to drivers. It’s a 3PL that pays carriers on time instead of delaying payment to maximize cash flow, and is aware of the need for financial flexibility in difficult situations. In short they treat your customers as their customers and do everything they can to build a good relationship.

Golden Rule customer service means honest and transparent communication with people who not only admit when there is a mistake, but head off potential problems with proactive solutions without making excuses or blame shifting.

Here are some ways to tell whether your logistics provider values and delivers Golden Rule customer service:

  • Browse the company’s Web site, Social Media sites, and Customer reviews. What kind of ethics do they promote? Read the Mission and Values statements and check for membership in the local Better Business Bureau and service organizations. Also note any local, regional, and even national service awards.
  • Get to know them. What kind of experience does your 3PL have? A corporate culture establishes itself in every company, no matter the size. The best corporate cultures are intentionally cultivated and reinforced by management— from the CEO to the college intern. Look for a corporate culture that melds well with your own.
  • Consider the provider’s communication policies. What communications channels are available when weather, mechanical problems, or road conditions delay shipments? Do you have to watch over your provider and worry about your shipment, or are you kept informed throughout the entire life of a load? Do they have real-time solutions or do they look to you for the answers?
  • Talk to your peers. Solicit industry colleagues’ opinions of which they prefer to work with, and what kind of experiences they have had. Have the 3PL’s employees treated others with honesty, integrity, and loyalty? Also talk to carriers. Who do they prefer to take loads from? When a small hauler likes a 3PL, you can be sure the company is worth a look.

Don’t settle for lackluster customer service when lots of entrepreneurs out there value good personal relationships and aim to do the right thing, in the right way, every day. Do what’s right for your company and your customers, and connect with those in the industry who share your values. Golden Rule customer service companies stand ready to serve you and your customers.

Rodeheffer, John. “Does Your 3PL Provide ‘Golden Rule’ Customer Service.” Inbound Logistics. (2011): n. page. Web. 20 Aug. 2013. www.inboundlogistics.com/cms/article/does-your-3pl-provide-golden-rule-customer-service.

How To Find The Right 3PL

The Right 3pl

So you have decided that a 3PL is the right way to better your business. Now you just have to find the right one in a sea of candidates. Here are some helpful things to keep in mind when selecting the right company for you.

  • Choose carefully. Until recently, Internet access and $10,000 was all it took to get a broker surety bond and become a transportation broker. However in the U.S. Congress recently passed legislation, that is now in effect, to raise the surety bond price to $75,000. This is a benefit to shippers, as the new requirements are meant to deter fraudulent brokers from acquiring the new surety bond.  While this new security helps, you still need to do your research. Ask the 3PLs you are considering for both customer references and a work history before entering into an agreement. If the company has been in business fewer than two years, consider moving on. The Transportation Intermediaries Association (TIA) is a good resource for qualified, legitimate 3PLs, because TIA requires all members to abide by a strict code of ethics when dealing with carriers and shippers. Remember a 3PL acts as an extension of your brand and you do not want to make a choice that might jeopardize your brand or reputation.
  • Use 3PLs for more than just a back-up plan for a last-minute load that needs covering. A common misconception is that 3PLs can always move a load at the last second. While 3PLs can often find the capacity needed in a pinch, it’s not a guarantee, and by only using them in an emergency you are missing many of their benefits. Instead, treat 3PLs like any other carrier. Give your 3PLs an opportunity to service your typical lanes, and see how they stack up against your other carriers. That way you are comparing the same costs and giving yourself the opportunity to make a better informed decision.
  • Ask what the 3PL does best. Like most companies, many 3PLs excel in certain niches, such as flatbed, less-than-truckload, or global shipments. Most companies started off focusing on one mode, and then added others along the way. Find a company that is able to service the mode of transportation you are most often using.  Ask 3PLs about their mode and lane strengths. Depending on office and yard locations, a 3PL can likely guarantee capacity in some areas of the country, while offering substantially lower rates. This knowledge will help you better match your transportation needs to the right 3PL.
  • Use your 3PLs as solutions providers. Use them as you would an asset-based carrier to handle only specific lanes, or treat them as an extension of your supply chain. Many 3PLs can operate as an outsourced logistics department, and can manage as much or as little of the shipping process as you need.
  • Cheaper isn’t always better. When reviewing quotes from transportation providers, consider more than just price, consider what that price includes. 3PLs can often offer a substantial savings over asset-based carriers; consider the quality of carriers being used to move your freight. Ask 3PLs about their carrier selection process, and be wary of those that use conditional carriers. A good 3PL will, at minimum, make sure all carriers are insurance verified, and have a satisfactory safety rating, established business history, and authority that are in good standing.
  • Consider claims handling. Despite their best efforts, but accidents do happen—so make sure you’re working with a 3PL who has your best interests in mind. A good 3PL can help facilitate a claim, and act on your behalf to resolve the issue. Some 3PLs carry insurance so if the carrier defaults on a claim, the 3PL will step in and cover the cost of the claim—but this is not standard practice.

Ask the tough questions, learn your 3PL’s policies, and get everything in writing so you set the proper expectations before you seal the deal

Gholston, Kyle. “6 Secrets to Finding the Right 3PL.”Inbound Logistics. (2013): n. page. Web. 20 Aug. 2013. www.inboundlogistics.com/cms/article/6-secrets-to-finding-the-right-3pl.

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