Finding the right 3PL warehousing is a crucial part of scaling and evolving your supply chain. It is an efficient step in freeing up any valuable space in your factory to maximise for production and assembly, handing off inventory management and storage to an expert provider.
Each component in a supply chain must be finely tuned, especially ones as complex as that of most OEM manufacturers where high value, highly complex products are being produced. Components must work together seamlessly to function optimally. And within this setup a 3PL partner is not another cog, but the lubricant ensuring parts work smoothly together. Selecting the best provider for your company's unique needs is therefore crucial.
The 3PL warehouse provider checklist
How do you select a 3PL warehouse partner that is right fit for your business? From our extensive experience providing warehouse consulting for top UK manufacturers we've honed down on the key ingredients.
This checklist provides a systematic framework to guide your selection so you can make that pivotal choice. It provides a granular and comprehensive approach for evaluating potential 3PL warehousing, for OEM manufacturers to make informed, data-driven decisions. It is focussed on helping you evaluate operational efficiency, cost-effectiveness, and strategic alignment with your OEM business.
— Strategic Location, Network and Infrastructure — Technology Capabilities and Integration — Comprehensive Service Offerings — Compliance, Certifications, and Security — Transparent and Flexible Cost Structure — Exceptional Customer Service — Scalability and Future-Proofing — Contractual Flexibility — Performance Metrics & KPIs — Robust Contingency Planning
Strategic Location, Network and Infrastructure
The location, supplier network, and infrastructure of your 3PL warehouse partner can have a direct impact on your operational efficiency and customer satisfaction. It is wise to consider future expansion possibilities, other storage requirements, and not solely current needs.
Connections
Does the location fit well as a nexus for supplier goods-in and delivery to (and from) your production line/assembly facilities. Are you consolidating existing supplier deliveries over to 3PL warehousing, or is your partner also able to leverage their own supplier network?
Transport Links
Access to major highways, ports, and airports. Efficient transport links can expedite shipping and reduce logistical delays.
Facility
Modern and well-equipped facilities are essential. What is the efficiency of the 3PL warehouse design for quick loading and unloading related to the goods and components you need managed? A well-designed layout improves operational efficiency, reduces labour costs and picking/packing times.
Technology capabilities and integrations
Technology is the backbone of modern warehousing. Ensure that your 3PL provider is equipped with the efficient inventory management systems and supply chain technology to facilitate smooth operations and data-driven decision-making.
Warehouse Management System (WMS)
Is the WMS fit-for-purpose and well integrated into working procedures, with real-time tracking and good adherence. A modern WMS can significantly improve inventory accuracy.
Portals & ERP Integration
Does your 3PL partner offer client portal for usability and transparency, along with seamless integration with between ERP systems. Integration capabilities can streamline operations and improve data accuracy.
Data Analytics
Capability to provide insights for inventory optimisation. We all know the power of data-driven insights to help make informed business decisions.
Comprehensive Service Offerings
Find a partner not simply a provider. A 3PL warehouse partner should be able to tailor to your needs, rather than simply provide basic off-the-shelf offerings. It's the difference between a customised made-to-measure suit and pret-a-porter ready-to-wear limited range of options. Look for a range of services that align with your business goals, that can adapt as you grow, and that are being developed constantly to take advantage of modern technologies and methodologies.
Core Services
Inventory management with picking, packing, delivery (and reverse logistics support as necessary). These are the basic services that any competent 3PL should offer.
Value-Added Services
Kitting, assembly, testing and quality assurance/inspections. These services can add value to your supply chain, enhance product quality and improve customer satisfaction.
Agility
Do they have the ability and agility to handle seasonal changes and dial volume and inventory up-and-down according to demand planning, order scheduling and changing business environment? Scalability ensures that the 3PL can adapt to your business needs as they evolve and inevitably adapt to changing circumstances
Compliance, Certifications, and Security
Compliance and security are absolutely essential, non-negotiable factors. They are foundational in a resilient supply chain service. Ensure that your 3PL provider takes these seriously and meets all industry standards along with having robust security measures in place to protect both physical and digital assets.
Industry Compliance
Including ISO (management, environment), or other relevant certifications and policy adherence (conforming to REACH and EU RoHS for example). Compliance ensures that the 3PL meets industry standards and legal requirements.
Physical Security
24/7 CCTV surveillance and premises security. Robust access control and security measures should be in place to protect your valuable inventory.
Data Security
Encryption and regular cybersecurity audits. Data security is crucial for protecting sensitive business information.
Transparent and Flexible Cost Structure
Cost is a major factor in the ROI equation and TCO (Total Cost of Ownership) calculations. Cheap is not always best. Balance competitive pricing with service quality. A transparent and flexible cost structure that acknowledges quality and service level contributes to better financial planning, and can contribute to higher profitability.
Pricing Breakdown
Detailed cost components including storage, labour, and value-added services. Transparency in pricing helps in budgeting and avoids unexpected costs. Ensure flexibility for supply cost changes and inflation (current market conditions have seen high fluctuations in pricing such as in packaging, for example).
Volume/Capacity Changes
Pricing flexibility based on volume commitments and inventory capacity (buffering, storage and component changes). How do these changes affect your value-for-money and service costs?
Billing Accuracy
Regular audits to ensure billing accuracy. Accurate billing is essential for financial planning and accountability.
Exceptional Customer Service
Is your 3PL provider client-focused and responsive to your business needs as goals and product evolve? Customer service is often the differentiator when all other factors are equal. Exceptional customer service with a trusting, responsive business relationship instils confidence, saves time, reduces stress and operational headaches.
Dedicated Account Management
Responsive and efficient point of contact for all queries. Does the 3PL provider operate with excellent relationship management, ensuring issues are resolved promptly with clear and accurate communication?
Client Reviews
Ask for existing client feedback, check any third-party reviews and case studies. Reviews can provide valuable insights into the 3PL's performance and reliability, and how well they fit as a business partner.
SLA Adherence
Track record of meeting or exceeding Service Level Agreements. Consistent SLA adherence is a good indicator of reliability and quality.
Scalability and Future-Proofing
Scalability is crucial for long-term partnerships. Does the 3PL provider have both the physical and technological capabilities to grow with you? Are they evolving with technological and market-driven trends?
Expansion Capabilities
Additional storage or services for future needs. Future-proofing ensures that you won't have to switch providers as you grow.
Technology Upgrades
Commitment to staying updated with the latest technologies. Regular technology upgrades can keep your operations at peak efficiency.
Service Updates
Are services being reviewed, assessed and updated to be best-in-class offerings with modern capability?
Contractual Flexibility
Contracts can be binding and restrictive. Make sure to read the fine print and ensure that the terms align with your business needs and offer flexibility for unforeseen circumstances. Contracts often fail to build in flexibility for environmental changes such as inflation and price fluctuations, bear this in mind.
Contract commitment
reconfiguring business processes and preparing for supply chain service changes is a significant commitment in time, finance and effort by all parties. Can you test provision and the relationship first, and scale accordingly?
Exit Strategy
Clearly defined termination clauses and penalties. An exit strategy protects your interests in case the partnership doesn't meet expectations.
Performance Metrics & KPIs
Be clear on your priorities, KPIs and service level. Performance metrics are your scorecard for a 3PL provider's service quality. Regularly review these to ensure service levels are meeting or exceeding the agreed standards and course correct if needed.
Service Level Metrics
On-time shipping, order accuracy, inventory turn, stock value held —gather these and other relevant metrics to provide a quantitative measure of the 3PL's performance.
Reviews
Regular performance evaluations against agreed KPIs. Annual, Biannual or Quarterly reviews allow for timely adjustments and improvements. Communication and monitoring is important and the responsibility of both parties.
Robust Contingency Planning
Contingency planning is crucial for risk mitigation. Ensure the 3PL provider has robust plans and adequate insurance coverage to protect against unforeseen challenges.
Scenario planning
Detailed plans for various emergency scenarios. Validate against various disaster and geopolitical scenarios to ensures business continuity in case of unforeseen events.
Insurance
Ensure adequate coverage for stored goods and goods in transit. Insurance coverage mitigates financial risks associated with damage or loss.
This checklist is foundational in assessing potential 3PL warehousing providers so you find the right warehouse consultants for your unique business needs. It will allow you to assess and ensure any potential partner has the facilities, experience, expertise and service offerings for your business requirements.
At Acorn our mission is to be a trusted partner to enhance your business through our supply chain services and expertise. A 3PL provider should not just be a service provider but a strategic partner, and as such it is a huge decision and commitment. But it isn't just about ticking everything off a checklist, it is also about developing a relationship with the right partner who is willing to go the extra mile, whether in delivering a bespoke service, or adapting to an unforeseen or emergency situation. Expediting a delivery to keep your production line running. Or finding an alternate supplier when an existing one lets you down.
Remember to factor this into any decision after you've done a checklisted evaluation.
Further reading: — Using a 3PL Warehouse Service To Boost OEM Scalability — Warehouse Optimisation Essentials: Ensure Peak Performance — Solve these major warehouse challenges to add supply chain value
Learn about our 3PL warehouse consulting expertise
Acorn work with UK critical manufacturers and a wide variety of OEMs to store and delivery essential inventory to them as 3PL warehouse partners.
We specialise in providing the ultimate 3PL and warehouse consulting experience to OEMs, adapting our key services such as kitting and assembly to their needs.
