3PL providers are companies that are outsourced by businesses to manage various components in the supply chain. They provide a wide range of services which are often integrated. These may include warehousing, consolidation of freight, transportation, distribution, inventory management and so on. By contracting these providers, many businesses have been able to save quite a lot in operating costs.
There are three recognized categories of third party logistics companies. The first category comprises those that are asset based. These use their own resources in their business operations. The second group, management based, only provides technology and management and uses assets of other companies. The last group, known as integrated providers may adopt either of the other two and then make supplements based on client requirements.
In identifying a provider, it is important to gather as much information as possible about the available companies. This is achieved by issuing a request for quotation (RFQ) or request for information (RFI). All the requirements should be communicated to the companies so that they can know whether or not they have the capability to provide these services. These details include numbers of items, number of deliveries, required size of warehouses, volumes involved and so on.
The 3pl companies place their bids for consideration. A set criterion is used in choosing one of them. They are evaluated based on a number of things including the services they provide, the technology they have at their disposal, the adequacy of warehouse space, number of personnel and dock capacity among others. Some business will also be interested the geographical region served by a given provider.
Flexibility is another important consideration. It will allow the business to make changes whenever such a need arises without affecting service provision. The prices of the different bidders are compared and considered together with their level of performance. Each bidder is then given a score that reflects their average.
Different businesses lay emphasis on different areas and will therefore allocate points to the prospective 3pl providers accordingly. Top companies (two or three of them) proceed to the final step. This involves site visits by the management, financial records reviews and face-to-face interviews. Once the winner is chosen contract negotiations start.
There are three recognized categories of third party logistics companies. The first category comprises those that are asset based. These use their own resources in their business operations. The second group, management based, only provides technology and management and uses assets of other companies. The last group, known as integrated providers may adopt either of the other two and then make supplements based on client requirements.
In identifying a provider, it is important to gather as much information as possible about the available companies. This is achieved by issuing a request for quotation (RFQ) or request for information (RFI). All the requirements should be communicated to the companies so that they can know whether or not they have the capability to provide these services. These details include numbers of items, number of deliveries, required size of warehouses, volumes involved and so on.
The 3pl companies place their bids for consideration. A set criterion is used in choosing one of them. They are evaluated based on a number of things including the services they provide, the technology they have at their disposal, the adequacy of warehouse space, number of personnel and dock capacity among others. Some business will also be interested the geographical region served by a given provider.
Flexibility is another important consideration. It will allow the business to make changes whenever such a need arises without affecting service provision. The prices of the different bidders are compared and considered together with their level of performance. Each bidder is then given a score that reflects their average.
Different businesses lay emphasis on different areas and will therefore allocate points to the prospective 3pl providers accordingly. Top companies (two or three of them) proceed to the final step. This involves site visits by the management, financial records reviews and face-to-face interviews. Once the winner is chosen contract negotiations start.
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