Third Party Logistics Companies Checklist for Choosing and Qualifying a 3PL

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Location for Warehousing:

•    Size of building
•    Number of bay doors (enough to ship and receive x amount of containers or trailers per day)
•    Close to ports, airports, railways
•    Close to major highways
•    Available space
•    Available space for busy / heavy shipping periods
•    Available space for expansion
•    Product mix: Complementary to yours? Same busy seasons, or alternating busy seasons?

Equipment:

•    Pallet racks
•    Conveyors
•    Flow rack (for pick and pack)
•    Scanning stations
•    Packing tables
•    Types of Forklifts-Preventive Maintenance (PM) Program?
•    Carton sealing machines
•    Label printers
•    UPS/FedEx shipping stations with scales
•    Value-added department – specialized equipment for your product
•    Assessorial activities: taping, banding, labeling, assembly work, etc.

Staffing:

Staffing

•    Testing of employees for reading, writing, comprehension, basic language and dyslexia
•    Certification/Recertification for Six Sigma, Kaizen, Kanban
•    Union or non-union staff
•    Temp agency staff or company workers
•    Turnover rate
•    Education, language and skill level of administrative support staff
•    Education and professional level of middle and senior management
•    Training procedures for new employees
•    Probation periods for new employees
•    Background checks of new employees
•    Disciplinary procedures for employees found making errors or stealing
•    Motivation methods for employees (merit based awards, raises and promotions or seniority based?)
I.T. systems issues:

•    Reporting capabilities: name of IT manager (to collaborate with your IT manager)
•    Warehouse Management System (WMS): Integration/customization capabilities
•    Transportation Management Systems (TMS): Optimization capabilities for your freight
•    Carrier Relationship Program (CRP)
•    Yard Management Systems (YMS)
•    Tracking freight systems
•    Theft Management considerations
•    File transfer capabilities
•    Modification possibilities
•    What are the shortcomings of their systems?
•    What are the shortcomings of your systems?
•    EDI, RFID or Voice Activation capabilities?
•    Order Management
•    Strong Inventory control capabilities
•    Strong location management capabilities
•    Systems available 24/7?
•    Cost to use 3PL’s systems

Flexibility:

•    Do they provide the necessary range of services?
•    Do they have partners or trusted suppliers for services they don’t supply but you will need?
•    Shift times
•    Overtime when necessary, and cost of overtime
•    Weekend work
•    Ability to add staff – labor pool
•    Ability to handle rush or emergency orders – what is the lead time necessary?

Communication:

•    Who provides what information to whom – both ways?
•    What is the time frame for the information provided?
•    What is the method of transferring information? (Should always be in written/email form)
•    In what format is the information being passed along?
•    What information does the 3PL require from you?
•    What information will they provide you?
•    Review and define jargon and terms to be used.
•    Conflict resolution: the chain of command to solve problems

Qualifications:

•    How long in business?
•    Warehouse: Asset or non-asset based 3PL?
•    Staff qualifications?
•    Accreditations?
•    Customer comments about the 3PL?
•    Core business/commodity specialty
•    Can they provide customer and other references?
•    Do they have experience shipping the same product as your company ships?
•    Do they have experience shipping to the same customers/consignees as your company?
•    What size customers do they handle?
•    What kind (corporate types) of customers do they handle?

Qualifications:

•    How long in business?
•    Warehouse: Asset or non-asset based 3PL?
•    Staff qualifications?
•    Accreditations?
•    Customer comments about the 3PL?
•    Core business/commodity specialty
•    Can they provide customer and other references?
•    Do they have experience shipping the same product as your company ships?
•    Do they have experience shipping to the same customers/consignees as your company?
•    What size customers do they handle?
•    What kind (corporate types) of customers do they handle?

Expectations of performance:

•    Customer service: Use of VOC=Voice of the Customer techniques to satisfy your customers: on tome delivery to your customers
•    Transportation: asset/non-asset? How to handle the FSC (Fuel Surcharge?);increases
•    Timetables and deadlines for receiving and providing information
•    Timetables for receiving new merchandise
•    Timetables for shipping orders
•    Expected quantities of inbound and outbound merchandise.
•    Expected number of orders and units picked or shipped daily/weekly/monthly.
•    What is the division of duties? Review all aspects of information management and flow to determine who is responsible for what (for example: routing, backorders, invoicing, returns, POD tracking, QC inspections)
•    What are the shipping priorities?
•    Service Level Agreement (SLA) with Key Performance Indicator (KPIs) experience
•    Types of contracts 3PL requires? Ability to negotiate with 3PL?
•    Price list validity? Dynamics of pricing?
•    Receiving, Inspection, Dock-to-Stock, Warehouse Management, Cycle Counting capabilities, inventory Management, warehouse-to-dock, turn around tomes?
•    Safety Program/Safety Manager
•    LEAN initiatives, meeting OSHA requirements, Six Sigma, Continuous Improvement/Kaizen, Kanban, Free/Foreign Trade Zone, cleanliness, 3PL teamwork

Compliance:

•    Who is responsible for routing, packaging, and shipping guidelines?
•    Who is responsible for charge-backs? Under what circumstances? What is the 3PL legal limit of liability? What does their insurance and your insurance cover and under what circumstances?
•    Who handles RMA: Returned Materials Authorization
•    Reverse Logistics Program
•    Create quantifiable standards and measurements of performance.
•    Does the 3PL subscribe to the VCF (Value Chain Federation) Clearinghouse (VCF is an organization that advocates trading partner alignment, retailer-supplier operating synchronization, and best practices by facilitating collaborative and educational opportunities and providing technology solutions to eliminate disruptions throughout the retail value chain. RVCF includes North America’s leading retailers, merchandise suppliers, and service providers)…. and do they use it?
•    CSA (Compliance, Safety, Accountability: US Department of Transportation: Federal Motor Carriers Safety Administration) compliance?

Pricing:

•    Price structure that is easy to understand and easy to check
•    Invoices formatted to your specifications with proper backup documentation.
•    Comprehensive price quote. Include all possible services you may require.
•    Payment terms

Finding a true partner:

Find a Partner

•    Do you feel they are honest, trustworthy and sincere?
•    Do you feel they have a passion for the business and a commitment to customer service?
•    Do they have the experience, education, and professionalism you require?

 

 

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