How to Establish and Manage Successful 3PL Relationships

Partnering with a third-party logistics (3PL) provider is vital to business success. Given the complexity of today’s supply chains, having an expert working with you can help overcome many challenges.

However, the process of choosing a 3PL partner should not stop from establishing a relationship. As a business owner, you should also set up means to keep your client-3PL relations positive and healthy.

Here are a few helpful tips to build and manage an ideal 3PL relationship.

How to Establish 3PL Relationships

Avoid starting a 3PL relationship without assessing your potential partner thoroughly. This process takes time and requires research, though. Hasty decisions will only lead to wasting resources.

So, follow these steps and best practices instead.

1. Determine Your Need to Outsource

It’s a waste of time and money to partner with a 3PL provider to realise later that your business needs a different strategy.

So, do some internal assessment first and identify your 3PL needs. Once you know that 3PL can help your business, start scouting for potential 3PL candidates.

You could ask for referrals or read client reviews. However, the best way to do this is to understand your 3PL provider’s operations.

2. Research About Your Potential 3PL Partners

Understanding what your 3PL provider does and can do for you is part of building a successful relationship.

With research and assessment, you can gauge the benefits your business will gain from the partnership. More importantly, this process lets you eliminate 3PL prospects that do not fit the bill.

When researching, focus on the following:

What are the services offered by the 3PL provider?
Does their technology fit my operations? Will integration be complicated?
Is their location strategic? Can it help me save time and money?
Are their services affordable? How do their prices compare with other 3PLs?
How long has the 3PL been operating? Who are their clients, and what do they say about their services?
What is their company culture like? Do we share the same values?

Our previous article on how to compare 3PL services may also help.

3. Set Mutual and Realistic Expectations

Both sides of a business relationship should be on the same page for it to work. So, once you find your ideal 3PL partner, communicate your goals early on.

Explain your objectives or requirements and how you will help achieve those expectations. Note that 3PL service providers have multiple clients.

By communicating expectations from each side, you can identify issues and negotiate in advance or find another solution.

Ideally, write your final list of expectations, like a contract, so you can refer back to them if needed.

How to Manage 3PL Relationships

After choosing your 3PL partner, the next step is to apply means to keep the partnership stable and long-term.

Problems in business relations will always arise. However, there are ways to handle them professionally while maintaining good working relationships.

Here are ways how.

1. Know Your 3PL Team and Appoint Contact Persons

Several people will be part of your 3PL partnership. However, you should have a single point of contact from each side.

Both contact persons will communicate and work together should issues arise. That way, you avoid receiving mixed messages or inaccurate information.

Ideally, assign this crucial post to senior personnel who understand the business well and have good foresight and problem-solving skills.

Aside from operational knowledge and experience, your 3PL representatives should know how to communicate, collaborate, and negotiate.

2. Practice Clear Communication and Transparency

Your 3PL partner is not an outsider. They will play a chief role in your business operations and eventual success. So, treat them as colleagues.

Make routine communication a foundation of your 3PL relationship. Involve them in your long-term plans, too.

Also, always keep them in the loop, especially when there are changes or new developments in your supply chain.

Let them know if you plan to change packaging or add new product lines. In the same way, your 3PL provider should be easy to contact when you have questions.

They should voluntarily relay updated information or operational changes that may affect your business. Through regular communication, both can act promptly to changing situations and keep operations smooth sailing.

Aside from meetings, you can also practice open communication through regular on-site visits. In-person and real-time data sharing help solidify relationships.

It also shows how sincere and invested you are in your partnership.

3. Measure Performance and Reward Success

To manage 3PL relationships, objective metrics or key performance indicators (KPIs) should be in place. These allow you to see how well your provider is doing and what else can you do for improvement.

Measuring performance ensures everything is going according to plan. So, make sure to monitor KPIs regularly.

Also, when your 3PL provider meets partnership objectives, apply means to incentivise success.

Having a bonus structure is one way to reward exemplary performance. Non-financial incentives, like feedback and recognition, exclusive opportunities, and training, may also be used to acknowledge achievements.

Aside from helping you build positive relations with your 3PL partners, these efforts set the stage for a lasting and successful partnership.

Build Lasting 3PL Relationships for Success

Often, business owners focus more on what services a 3PL partner can provide. Unfortunately, the means to manage effective relations usually take a back seat.

Given the benefits of having a good 3PL partner, we now see that services and strong relationships go hand in hand. Both should be given equal weight when outsourcing services.

Effective Logistics can be your strategic and reliable 3PL partner in one. We deliver comprehensive services and supply chain solutions through our experienced team.