How to Choose the Right Logistics Partner
What is a Logistics Partner?
Simply put, a logistics partner is an external company that can support your logistics and transportation needs. Some 3PLs focus on providing transportation services, while others focus on providing other services, such as Warehousing or Distribution. 4PLs oversee a company’s entire supply chain, often managing multiple 3PLs in the process. Whether you partner with a 3PL, a 4PL, or some combination of the two, these companies provide the people, processes and technologies to support your supply chain operations and help you achieve your business goals.
Warehousing Solutions
One of the first and most common struggles that growing companies run into is finding the right warehousing space in the right location to store their products. By collaborating with a logistics partner, you’ll have access to a network of facilities to meet your needs. These warehouses often feature high-tech inventory management systems, which in turn reduces your risk of overstocking or facing stockouts, security systems and personnel to safeguard your products, and if needed, temperature-controlled space to ensure the freshness of perishable items.
Inventory Control
Another specialty of logistics partners is inventory control. They can help you find the sweet spot where you can keep up with customer demand without overstocking or experiencing costly stock outs. To do this, logistics partners use sophisticated inventory management systems that monitor your stock in real-time, forecast demand, and replenish supply when needed.
Transportation Management
Logistics partners quite literally do all the heavy lifting. They handle the transportation of goods from suppliers to manufacturers and from manufacturers to retailers or end customers. Transportation-focused 3PLs can connect you with carriers spanning various modes of transportation, including road, rail, sea, and air. 4PL providers can orchestrate the activities of multiple 3PL providers while optimizing routes to reduce costs, mitigate risk and ensure timely deliveries.
Why Do You Need a Logistics Partner?
At this point in your business journey, you may still be unsure if collaborating with a logistics partner is really necessary. I mean, you’ve made it this far on your own. However, it’s crucial to think about the future, so if you’re experiencing any of the following situations, you should strongly consider a logistics partnership to futureproof your business.
1. Limited Space in Your Inventory
Regardless of where you’ve been storing your product, running out of space is a good problem to have. It is a direct reflection of success. However, it’s hard to stay organized when you have boxes of products piling up in your warehouse. Overstocking a storage space is a recipe for product mix-ups and shipping mistakes. So, rather than going out and renting a bigger storage facility, by connecting with a logistics partner, you get more space and can simultaneously optimize your logistics network in various ways.
3. Growing Customer Base
A growing customer base is something you can be proud of. However, with growth your business may also experience increased supply chain complexity. A logistics partner can help you manage your growth so that you not only grow, but you grow profitably. Here’s an example of a Sheer Logistics client that was experiencing rapid growth and reached out for assistance.
2. Risk Mitigation
As your business grows, you’ll probably run into risks that you have never faced in the past. Unfortunately, new problems rarely provide a warning, and you might be caught off guard by an unexpected issue you weren’t prepared for. Logistics partners have extensive experience with businesses of all shapes and sizes. You can lean on their expertise to help you navigate the challenges ahead.
4. Cost Savings
Without a doubt, you’ve discovered that shipping products, both domestically and internationally, can be expensive. Transportation and logistics expenses make up a significant portion of their annual budget for manufacturers, retailers and ecommerce businesses. According to McKinsey & Company, “logistics costs currently represent 12 to 20 percent of e-commerce revenues,” and that number may be even higher for you if you haven’t worked out all the kinks of your growing influx of orders. Partnering with a logistics service provider is a great way to save on transportation costs, allowing you to focus on other aspects of your growing business, such as marketing, advertising and customer service.
What to Consider When Choosing a Logistics Partner
There are many factors to consider when selecting a logistics service provider. Here is a high-level list of attributes you should look for in a potential 3PL or 4PL partner.
Experience and Expertise
Whether you are selecting a 3PL or a 4PL, it is critical that you look for a partner with the experience and expertise you need to achieve your supply chain goals. Consider how long the LSP has been in business and assess the relevant industry experience of their leadership team as well as the team that will service your business on a daily basis. Look for awards, accolades and evidence of thought leadership, such as speaking engagements, articles in industry publications, and social media presence.
Reliability and Reputation
In effect, your reputation will rest on your logistics partner’s ability to manage your supply chain efficiently and effectively, from delivering orders on time to managing freight audit and payment. So, you’ll want to make sure that your provider has a good reputation and can meet your requirements. Start by doing your research. By perusing Google reviews and even Reddit posts you should be able to assess whether the LSP provides consistent service and has a good track record with clients and carriers.
Technology and Innovation
Advanced technology makes real-time tracking, efficient order fulfillment, and inventory management possible. When choosing a 4PL partner, look for one with an extensive TMS (Transportation Management System) and WMS (Warehouse Management System) to streamline your logistics operations.
Geographic Coverage
It might sound obvious, but it’s important to make sure your logistics partner covers your areas of operation. There’s nothing worse than preparing to fulfill international orders and finding out that your logistics partner only ships within your country.
Cost and Value
Remember, partnering with a 3PL or 4PL provider should help you save money in the short term and control costs in the long term. However, the fee structures can vary from one provider to another, so be sure to compare different 4PL options against one another to find the one that offers the best value for money.
Communication and Collaboration
Effective communication is essential for a productive logistics partnership. Your provider should be transparent, quick to respond, eager to collaborate, and willing to address any challenges that arise.
Flexibility and Scalability
Flexibility and scalability are two of the main reasons that shippers seek out a logistics provider. As you evaluate potential partners, consider whether the provider is capable of addressing your needs not just now, but into the future as your business continues to grow and evolve.
Reach your Full Potential with Sheer
You’ve worked hard to get your company where it is today, but here at Sheer, we believe this is just the beginning of your success. If you are ready to take your business to the next level, don’t hesitate to contact us today. Our team of logistics experts can help you create the perfect plan to reach your supply chain goals and overall business objectives.
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