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.
The providers are in three categories. The first category is that of the asset based companies who are so called because they use their own assets in service provision. The second group comprises the management based companies. These only provide technology and management services but do not use their own resources in this. The last category is referred to as the integrated providers. They use any of the other two approaches and supplement with services tailored to meet specific client needs.
When selecting a third party logistical provider it is important that a detailed request for information (or RFI) or quotation (RFQ) is issued. The required logistics can only be fulfilled fully if all the requirements are communicated to potential companies. Some of the information that must be provided includes details of the volumes involved, the number of deliveries to be made, the warehouse sizes, numbers of items and so on.
Prospective 3pl companies put in bids for consideration and these are then evaluated based on the set criteria. The evaluation will involve, among many other things, whether the company provides the required service, whether they have the required technology to accomplish the required task, whether they have adequate warehouse space, personnel, dock capacity and so on. It is also important to know about the geographical locations that are suitable to cover the required networks.
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.
Once all these factors have been put into consideration, all the potential 3pl providers are given bidder scores. Each business has areas that are more emphasized than others and these areas contribute more towards the final score. The management then selects about three top companies and conducts site visits, reviews financial records and holds face to face interviews. In the end, only one company is left and contract negotiations can begin.
The providers are in three categories. The first category is that of the asset based companies who are so called because they use their own assets in service provision. The second group comprises the management based companies. These only provide technology and management services but do not use their own resources in this. The last category is referred to as the integrated providers. They use any of the other two approaches and supplement with services tailored to meet specific client needs.
When selecting a third party logistical provider it is important that a detailed request for information (or RFI) or quotation (RFQ) is issued. The required logistics can only be fulfilled fully if all the requirements are communicated to potential companies. Some of the information that must be provided includes details of the volumes involved, the number of deliveries to be made, the warehouse sizes, numbers of items and so on.
Prospective 3pl companies put in bids for consideration and these are then evaluated based on the set criteria. The evaluation will involve, among many other things, whether the company provides the required service, whether they have the required technology to accomplish the required task, whether they have adequate warehouse space, personnel, dock capacity and so on. It is also important to know about the geographical locations that are suitable to cover the required networks.
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.
Once all these factors have been put into consideration, all the potential 3pl providers are given bidder scores. Each business has areas that are more emphasized than others and these areas contribute more towards the final score. The management then selects about three top companies and conducts site visits, reviews financial records and holds face to face interviews. In the end, only one company is left and contract negotiations can begin.
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