Selecting A 3PL

The company that is selected should be able to fulfil all the logistics requirements and that can only be assured if every requirement is communicated to potential companies. The RFI should include a detailed description of the areas to be outsourced. This will usually include:

•The scope of the contract, including locations, facilities, departments.

•Information on volumes involved; number of deliveries, warehouse sizes, number of items, etc.

•The logistics tasks are to be performed, e.g. warehousing, transportation, etc.

•The level of performance required.

After the bids have been received by a company from the prospective 3PL’s, an evaluation would take place where a multi-discipline team will review each bid based on a pre-defined set of criteria. These will include some of the following.

•Does the 3PL provide the services required?

•Does the 3PL have the technology required to perform the tasks required?

•Does the company have the required warehouse space, dock capacity, warehouse personnel, etc.?

•Is the 3PL financially sound?

•Are the 3PL’s geographical locations suitable to cover the network?

•Does the 3PL have the flexibility to respond to changes?

•Are the 3PL’s environmental policies compatible?

•Are the costs of the services detailed enough for comparison to other bids?

•Are the customer references acceptable?

•Is the 3PL a good cultural fit?

The selection team will usually review each of the bids based on the criteria and give each bidder a score. Depending on the importance of each criteria, a weighting can be given which gives more importance for one or more criteria in the selection process. Once the selection team has evaluated the bids, management will often select the top two or three companies for site visits, face to face interviews and more detailed reviews of financial records. Once a company has been identified contract negotiations would follow before a final agreement could be reached.

Source : Martin Murray by  About.com guide