When you start to look for a third party logistics (3pl) company, there are a few things to consider.

Here’s our top 3 tips in working through your decision on pickign a 3pl.

1. Location

Were you locate your inventory to ship orders from impacts your cost and speed.

Where are your customers located?

If majority of your sales are in Melbourne, having a warehouse in Perth might not be the best choice.

The cheapest freight is for metro to metro areas. This means shipping with in the same city, will be faster and cheaper for you.

2. Product Size and Weight

Are you products large and bulky?

Or small and delicate?

There are 3PLs that specialise in bulky goods, such as furniture and white goods. Handling these goods, need specialised handling equipment and the right labour. These warehouses also have larger floor space areas to store these goods.

On the other side, handling small spare parts – means Shelving and racking to hold a high number of product lines. The pickers are using trolleys and packing benches to compile orders.

It is best to check with the 3PLs you engage with if they handle similiar commodities.

3. Business size

Think about Coles/Woolies vs your local green grocer. It is the same in the 3PL industry, with big players vs SMEs.

If you are a large business, sending 1000s of orders a day – you are looking for:

Capability that the service provider can meet your requirements

Scale up and down as your business needs

Multi year contracts, for business continuity

Competitive pricing, running tendering processes and having service level agreements in place.

Innovations from your 3pls, to improve services to your customers. Best systems and equipment.

The larger the business, the less flexibility there is the smaller your trade with them.

If you are starting out, working with a small/medium provider is a better option. Providing you more flexibility and direct support to help your business.

Going with the biggest, isn’t always the best!

Cloud systems have levelled the playing field for outsource providers. Warehousing systems that costed millions of dollars are now available for thousands. 

Automation costs are also on a decline, with newer technologies making it more affordable for companies to invest in efficiencies to compete with larger players.