What to Look for in a 3PL Operator

Third-party logistics (3PL) providers have become increasingly important to the modern distributor. Outsourcing essential services can be an efficient and cost-effective way of growing your business and meeting your customers’ needs.

There’s no big capital outlay, no need to lease a facility, buy equipment, or manage employees. With a shared warehouse you only pay for your portion of the labor and management of the storage, so there are immediate efficiencies and financial benefits. 

Outsourcing makes you far more agile too, allowing you to make decisions and react to market conditions more quickly. Rather than being tied into a long-term lease of a facility, it’s far easier to change location or expand if you outgrow the site, for example.

“More and more distributors are turning to 3PL and outsourcing,” says Brett Mears, President at Palmer Logistics. “Local regulatory agencies are getting stricter and more sophisticated, so there's a lot more focus on warehousing and keeping to the letter of the law. It can be very expensive to properly store and distribute hazardous materials and chemicals yourself. A distributor doesn’t have to set up a large facility at significant cost because they can leverage existing capability from a third-party warehouse. With us, they can outsource the risk and the cost.”

In the chemical industry, reputation is everything. It’s therefore important to consider your chosen 3PL operator as an extension of your brand. They need to be reliable and responsible, offer excellent service, and store products responsibly.

“Being a 3PL and running a chemical fulfillment center is not just about having four walls and a forklift - it's knowledge, procedures, licenses, and regulation,” adds Dino Moler, Executive Vice President at LeSaint Logistics. “It’s about always making sure our facilities are up to spec, that our employees are well informed and safe, and that they know how to care for our customers’ product. We offer a culture of customer service, compliance, and safety.”

So, what should you look for in a suitable operator? Find a quick guide to this question below, and read about it in full detail in our U.S. Chemical Warehousing for Responsible Distributors white paper.

• Cost is clearly a factor but you get what you pay for. Don’t be distracted by offers that seem too good to be true. A low price may seem attractive but if the 3PL provider fails to follow the correct procedures, there will inevitably be problems – and any incidents could be damaging to both your reputation and the wider industry.
• Find a facility that has defined processes. Plan a visit, tour the warehouse, and meet the team – even virtually. Kick the tires – ask about regulatory measures, health and safety, and see how they manage flammable, corrosive, and hazardous materials.
• Trust is important but always ask to see relevant paperwork and check permits are in order. It’s not unreasonable to ask for a certificate of occupancy or permit from the local fire marshal. You should never have any push back from a legitimate third-party warehouse when you ask to see their accreditation.
• Ask about employee retention. If a facility has a high turnover of staff, it’s going to be difficult to execute procedures effectively and consistently. Keeping hold of skilled people suggests the business has a great culture and strong leadership. Bad businesses lose staff.
• Use a provider that uses external auditing and can prove they're doing things right. An NACD Affiliate is ideal because they've already been thoroughly vetted and are maintaining high standards. Look for the Responsible Distribution logo; a verified company will follow the correct procedures and push for continuous improvement.

To find out more about verified warehouses and carriers, visit https://www.nacd.com/responsible-distribution/verified-warehouses-carriers/