How to Transition Your Business to a 3PL Model
You may already be well aware of the myriad benefits that the 3PL model may have for your business and are considering adopting this solution. Before choosing a third-party logistics provider and making the move, however, it is necessary put an actionable plan in place to ensure a smooth transition. After all, making this leap affects not only your business’ distribution and fulfillment services, but other aspects of your company as well.
3 Reasons to Adopt the 3PL Model
1. Your business is growing, and you want to ensure seamless scalability.
As businesses grow, so do their logistical needs. Anticipating the growth of your company’s logistics operations is crucial for continued success. Partnering with a third-party logistics provider allows you to implement efficient, flexible supply chain processes that ensure your bottom line is taken care of — leaving you to focus on your core business.
2. You’re grappling with fluctuating order volumes that are becoming untenable to manage on your own.
For companies that own and manage their own warehousing and shipping solutions, seasonal influxes in production demands can be challenging to get a handle on, which results in decreasing efficiency and increasing overhead costs. If your goal is to maximize cost-efficiency and minimize your overhead, a 3PL provider is well-equipped to handle these fluctuating supply chain demands with logistics services like warehousing, cross-docking, less-than-truckload (LTL) freight consolidation, co-packaging, and more.
3. Your customer experiences are suffering
As with any business, it’s critical to keep your customers’ needs in mind with any major business decision you make. If you manage your order fulfillment using a first-party logistics model and your customers are becoming increasingly frustrated by delayed or inaccurate orders, it’s a telltale sign that your logistical demands are outpacing your capacity. By moving to a third-party logistic model, you will reduce hiccups in your supply chain and keep retailers, distributors, and ecommerce customers happy.
Choosing a Third-Party Logistics Provider
Transitioning your company’s supply chain management to the world of third-party logistics requires careful decision-making and due diligence. After all, when you settle on a 3PL provider and implement these new processes, you’re entering into a long-term relationship.
Assemble a 3PL Request for Proposal
Before you start “shopping around” for a 3PL provider, it’s important to know exactly for what you are looking for. You may want to draw up a request for proposal (RFP) that lists your needs and the results you would like to see for your company. Experienced third-party logistics companies will be able to work closely with you to gauge what 3PL service offerings will be required to meet your distribution goals.
Schedule Facility Tours for Each 3PL Provider Under Consideration
Once you’ve settled on a 3PL provider that sounds like a promising match for your needs, you will want to schedule a tour of their facilities. After all, it’s important to know where and how your goods will be stored and moved through the supply chain.
Evaluate the 3PL’s Warehouse Management Systems
Among the most important ways a 3PL deploys the use of technology are in its warehouse management system (WMS) and transportation management system (TMS). Atlanta Bonded Warehouse partners with JDA Software Group, Inc to implement a custom WMS and standardize all operations. Within the first five years of adopting this system, ABW has been able to increase efficiency through refining task management, maximizing inbound and outbound tasks by reducing trips with empty forks, and tracking individual employee performance measurements. All of this empowers ABW to provide a stronger 3PL experience for our clients.
Reach Out to the 3PL Company’s Current Clients
As with any potential new hire, you will want to do your research and seek valid references for any 3PL provider with whom you are considering a partnership. One of the best ways to go about this is to speak to some of their existing clients — especially clients that are in the same industry. as you.
Choose a 3PL Partner in a Location That is Strategic to Your Supply Chain
In order to maximize efficiency and streamline the supply chain, it is critical that a 3PL is strategically located to both your own facility as well as distributors and retailers. Atlanta Bonded Warehouse maintains 14 facilities across the Southeast, though most of our facilities are centrally located throughout Metro Atlanta, Georgia. Choosing to do business in this strategic region means you have access to key transportation routes and hubs, including several major interstates and railways, the world’s busiest airport (Hartsfield-Jackson Atlanta International Airport), and the port of Savannah, Georgia just a few hours away.
Tips for a Smooth Transition to a 3PL model
Once you’ve chosen a 3PL provider, you now need to begin the implementation of this new business model. Here are a few tips to keep in mind as you integrate new logistics services into your supply chain management structure.
Communication is Key!
Transitioning to the 3PL model requires moving a lot of little details from Point A to Point B — an effort that will require outstanding communication and coordination between you and your logistics provider. A great 3PL will be able to customize their implementation process to suit your unique needs, so be sure to document and share your existing processes and procedural manuals so that the 3PL can replicate those processes (or maybe innovate them to be more efficient).
Maintain Order Fulfillment During the Transition
The supply chain can’t just stop while you make the move to your new 3PL. You must still handle the day-to-day shipping and inventory management tasks while you make your transition to the 3PL model. Have a plan in place for dealing with orders to be shipped during transition time as well as new inbound receipts. Consider how you’re shipping orders during this transition to reduce downtime and delays. To make life easier, you may want to align your company’s 3PL transitionary period with an expected period of lower volume, or in time for a new fiscal quarter.
Ready to Make the Leap to Third-Party Logistics?
If you are not already partnered with a 3PL provider, now is the time to start! Atlanta Bonded Warehouse offers seamlessly integrated supply chain solutions for warehousing and co-packaging services, as well as less-than-truckload (LTL) shipper services through our sister company, Colonial Cartage Corporation.
Contact us today to learn more about how our logistics services can streamline the cost-effectiveness of your supply chain processes.