3PL concept

Outsourcing logistics to third parties is quickly becoming a norm for most large-scale producers. Regardless of the industry you are working in or your business structure, if you are reaching many consumers, then maintaining those numbers is necessary for sustained growth. The biggest challenge in this regard is ensuring your products’ availability in the market. This is where the need for a good warehousing solution comes. Choosing the right 3PL warehouse can make a big difference in your profitability and the following points will help you figure out how to find the right partner for storing and shipping your products.

What is the size of the distribution network?

Before anything else, the thing that you must focus on is the network of warehouses that you can access. Determine the areas that you want to cover and see if the 3PL warehouse company you are considering has the proper network of warehouses to cover that area. Furthermore, the level of penetration you are expecting to achieve will also be a factor. To address that, each 3PL warehouse where your product is stored needs to have enough space to store a good quantity that can cover emergencies and increase your volume.

What prices are you paying?

This is another key factor that can make or break your deal with any 3PL warehouse that you are considering. Each company running a warehouse has its own set of costs that you must bear. Go through the different things that they are expecting to get from you and see where the best value lies. Typically, the base cost is related to volume. The higher the volume that you are moving, the lower the cost will be per unit. Lower volumes would similarly have a higher per-unit cost for storage and shipment. In addition to that, you may also be required to pay the 3PL warehouse other costs like packaging and materials, order customization fees, disposal costs, etc. Be sure to consider the impact of all these things before making your decision.

Does the 3PL warehouse have insurance coverage?

Male worker inside a 3PL warehouse

Package security has become a big thing these days, especially with the e-commerce platform that offers warranties or if you are selling expensive items. Not all warehouses offer insurance to their clients as many people do not need it anyway. Depending on your product type and its sensitivity, you might want to consider opting for a 3PL warehouse to cover all your shipments. Typically, the coverage is for transportation, interruption to business activity, and legal liability against damage or losses. If you opt for a warehouse with insurance, be sure to understand all the fine details of your contract before signing it.

What kind of technology is the warehouse employing?

In recent years, this factor has gained a lot of importance when it comes to deciding which warehouse is the best option for your company. Getting live information on inventory, receiving key notifications, product monitory, security and several other factors are considered when figuring out which 3PL warehouse would suit you best. A company that employs the latest tools will make things easier for you and that would increase your efficiency as well. Even though you may be paying top dollar for the service, the result would be a substantial increase in your profitability, making that investment worthwhile.

Each of these factors stands important and you must make sure that the warehouse you are selecting for your products meets all these criteria. Is there any other factor that you think should also be a part of the decision-making process? We would love to hear your thoughts on that in the comments!