By choosing to work with a 4PL provider, companies can take their logistics game to the next level. Even the largest national shipping companies can only dream of having the kind of insights available to a 4PL. That said, the process of choosing a 4PL that is right for your business isn’t as seamless as the experience will be once you’ve signed the contract.
There are many things to consider in this process, and the future of your business may depend on choosing the correct fourth-party logistics provider. Thankfully, there are a few ways you can narrow down your search once you know what you want out of your agreement.
Understand Your Needs
Fourth-party logistics providers come in every size, shape, and specialty. Some focus solely on ships, some handle air freight itineraries all over the world, and some have their hands in every pocket of the world’s logistics chain.
Matching a fourth-party logistics provider with your organization is crucial to ensuring the smooth flow of your goods from manufacture to last-mile delivery. The first step, however, is knowing what you need. Here are some questions to ask yourself when undertaking this search:
- Do I need help with warehousing, or only shipping?
- Are my customers scattered around the globe, or are they clustered in specific areas?
- What method of transport is best for my business?
- Where do I see my business next year, and am I growing from a domestic to an international organization?
- How will these future changes affect my needs?
Answering these questions will help you understand where you should focus your search efforts in the quest for the perfect 4PL.
Specialized or Jack-Of-All-Trades?
If you are a domestic shipper, you may only need to work with a 4PL who works within the country. There is little reason to choose an international provider if you’re never going to be handling international cargo.
In other circumstances, you may wish to partner with two 4PL suppliers. The benefits of a fourth-party logistics company that works internationally is that it is skilled at getting things through customs and into major cities around the world. Outside of that network, however, the company may have little knowledge of the realities on the ground. This can be especially true in developing countries with poor infrastructure or localized government bureaucracy that can confuse even the most efficient logistics specialists.
Fourth-party logistics companies specializing in this country or region of the world will be far more adept at last-mile delivery than larger companies. Two extra days in a sweltering tropical warehouse because of an unforeseen local bottleneck could mean the difference between your products arriving on time or being ruined. In cases like this, working with two companies may be the best plan.
Assessing Capabilities and Integration
When discussing options with 4PL providers, be sure to find out what the company’s capabilities are. A great way to understand this is not only by listening to the company’s pitch, but by also asking in-depth questions.
Explaining your current hurdles, frustrations, and bottlenecks will allow the 4PL to either answer your questions satisfactorily or inform you that what you want is outside the scope of their capabilities. These questions are crucial to avoiding miscommunications that can lead to costly contract rewrites and headaches further down the line.
Lastly, it is important to understand how the 4PL can be smoothly integrated into your company’s operations. For example, partnering with a 4PL may save you money on international freight, but maybe the company doesn’t offer pickup from your office, and all that money saved must be spent on hiring a separate crew to deliver from your door to the 4PL. In circumstances such as this, the math may not make sense.
Final Thoughts
A business is a complex machine, and some parts of that machine, such as shipping routes, are prone to breaking. Hiring a fourth-party logistics provider is one of the best ways to keep that machine in working order so that you can focus on the other aspects of your enterprise. A 4PL can make every mile of delivery smooth, from first to last!
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