In order to partner with a 3PL, instead of building your own warehouse, the following is the successful method:
Create a 3PL Project Plan with a target date and Project Leader/Manager
Create a cross-functional team to address all 3PL implementation issues
Investigate all 3PLs and consider which 3PLs will have the best fit for you
Have Sales do a frequency distribution of which of your commodities is sold in which states and place the 3PL close to those most frequently shipped to states
If you import your commodity, insure that there is a major port near the 3PL and that you have an effective Freight Forwarder and Customs Broker to monitor your imported shipments and clear your freight through US Customs
Choose at least three (3) 3PL candidates
Send an RFQ (Request for Quotation) to all three (3) 3PL candidates, including your estimated volumes
Always have a fail safe/fall back plan should any of these 3PLs fail. You have to have other 3PL ready to use should any of your chosen 3PLs fail during negotiations/visitations
Analyze prices from your RFQ: who has the best value for you? (A cheap price brings cheap service) ALSO REMEMBER that your ESTIMATED volumes will be matched against your ACTUAL volumes, and prices will be adjusted if the two: estimates versus actual volumes are far off: Negotiate a Change Process Clause to review the SLA/KPI and pricing every 30 days, especially during the “honey moon period.”
Put together a Service Level Agreement (SLA) to manage your 3PL’s service level and add Key Performance Indicators (KPIs) to the services you require to be monitored by both parties. Some KPIs are: Customer Service, Inventory Levels, Inventory Records Accuracy, Returned Material Authorization(RMA) Process, Cost Reduction Expectations, LTL Customer Service/Turnaround time/Future Cost Reduction, Penalties for missing KPIs and a Change Process Clause to Negotiate SLA/KPIs and Prices frequently
Negotiate Prices face-to-face along with Miscellaneous Pricing from the 3PL: pallets, banding, labor rates, and overtime, etc
Negotiate the contract and terms an conditions with the 3PL, before the lawyer reviews the contract to look for obvious problems in the contract.
Visit the local 3PL facility with an agenda sent in advance to see their warehouse organization and initiatives: 5S, Cleanliness, Location Control, Organization, OSHA Requirements, Kaizen/Continuous Improvement, Kanban, Gemba, Six Sigma, Safety, etc
After the tour, critique the 3PL warehouse and organization in the 3PLs Conference Room
Visit the 3PL out of state facility you choose to warehouse your commodity to insure all specifications are met and that you have good chemistry with the management and staff of the 3PL facility you will be using. Visit some of their customers in the area after you have a long list of customers so the 3PL does not know which customers you will visit. Ask these customers about the pros/cons of the chose 3PL
When all areas are negotiated and prices are set, have your lawyer review the contract, with your suggestions, before it is signed by your CEO.
It is good business to have your Project Leader/Manager stay at the out of state 3PL for a month to monitor all 3PL activities and report back to the CEO and the 3PL cross-functional team.
You have met your target date and have the 3PL in place, with review periods set.
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