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February 10, 2023

6 Red Flags to Look For When Choosing a 3PL Partner


Choosing a third-party logistics (3PL) partner will inevitably impact the future of your shipping operation. In short, you want to partner with a proven 3PL that fits your needs to ensure you're hitting your goals in no time! Sign a contract with one that isn't a good fit, and achieving your goals will feel like an uphill battle.

This is why it's vital to find a 3PL that fits all of your needs before signing a contract. This vetting process can take time, but is well worth it in the long run. There are many 3PL partners out there , but there are some red flags to look out for when beginning your process.

Low Upfront Costs

It's no secret that one of the main benefits of using a 3PL is to reduce your costs. With third-party logistics, you can better manage your warehouse stock and reduce fulfillment costs by a significant margin. This not only saves you time, but also money in the long run. 

When you're looking to relieve your tight bottom line, finding a 3PL that's cheap sounds like the best course of action. However, the price of the 3PL should not be the decisive factor. There are several potential risks to choosing your 3PL partner by price and price alone, including:

  • A lack of the latest technology implementation
  • Being unable to provide personal customer service
  • Potential lower quality standards
  • Various hidden costs that may come out later, along with higher shipping costs

Because of these reasons, choosing a cheaper 3PL partner may actually end up costing you more in the long run. If the 3PL is not upfront with all the costs, it's better to consider a stronger investment. 

An Inconvenient Location

As human beings, we can't help but love convenience. It may seem like a great idea to choose a 3PL that's physically close to you — after all, it will be easy to check in on the distribution facilities. However, you need to keep in mind your customer's proximity as well. If your offices are on the west coast, but your customer base is primarily in the midwest, choosing a 3PL-based closer to your customers will help you reduce shipping time. 

Keep in mind reducing shipping time may not be a priority depending on what type of product you have. Quality control may be a stronger priority, in which case having a 3PL located closer to you is ideal. No matter what you choose, it's important to keep your customer's experience top-of-mind, and let that help you determine where your ideal 3PL will be located.

Doesn't Use or Organize Data

Data is a key driver of 3PL success. When a 3PL doesn't properly utilize data, it can result in poor performance. This is often shown through poor inventory management, order inaccuracy, mislabeled packages, and more. Without a solid grip on complex inventory management, it can lead to the loss of a returning customer. 

More than that, an inability to organize and prioritize data can show a deeper lack of the right technology needed for success. A good way to determine if this is the case is by asking for a project plan, or simply what kind of technology they use. If the 3PL in question can't provide a plan or is only familiar with Excel, it's a sign to avoid that 3PL. Instead, look for a 3PL that utilizes a warehouse management system (WMS). This will lead to stronger data accuracy and forecasting that can help your company scale.

Won't Support Your Growth as a Company

Speaking of growth, your goals should be your 3PL's number one priority. If growing your business is on your mind, your 3PL needs to have the flexibility to support your scaled operations. When you begin your search for a compatible 3PL partner, consider what other partners they have. Do they have large-scale operations? Would they be able to support growth? If not, then it may be time to look elsewhere.

Lack of experience in your industry

This may go without saying, but choosing a 3PL with a lack of experience in your field of fulfillment can be a risk. If your products have specific requirements that must be maintained as the industry standard, you want a 3PL who already upholds those standards without needing further education. Common industries like this include clothing, food and beverage, and health. 

Regardless of industry, you'll want a 3PL with extensive experience that will be an extension of your business.

Finding A True Partner

As mentioned, there are plenty of 3PL companies out there and, at first glance, some of them may seem like a perfect fit. Finding the perfect one will only come through research and time. 

With over 50 years of helping out clients achieve their goals, Materialogic knows a thing or two about being attentive. We look at your goals and work alongside you to help you reach them. We believe that a client's success is our success. Reach out to our team today to begin your partnership with an experienced 3PL like Materialogic.

Guide to Selecting a 3PL Partner

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