Anyone working in logistics knows that the 3PL industry is constantly changing and full of challenges. From shifting customer demands to new technologies, staying on top of it all can feel overwhelming. That’s why having a solid understanding of 3PL services and industry best practices is essential for success. By following proven strategies, you can improve operations, grow your business, and provide better service to your customers.
In this article, we’ll share key best practices and tips that can help third-party logistics providers thrive in today’s competitive supply chain environment.
What is a Third-Party Logistics Provider (3PL)?
A 3PL, or third-party logistics provider, is a company that handles logistics tasks for other businesses. These services can include transportation, warehousing, distribution, and order fulfillment. Many 3PLs also provide extra services like packaging, assembly, or returns management.
By outsourcing logistics to a 3PL, businesses can save time, reduce costs, and focus on growing other parts of their operations. At the same time, 3PLs play a key role in keeping supply chains running smoothly and efficiently.
Important KPIs for Measuring 3PL Performance
To track performance, 3PLs rely on key performance indicators (KPIs). Some of the most important KPIs include:
- Order accuracy rate – ensuring the right products go to the right customers.
- On-time delivery percentage – measuring reliability.
- Inventory accuracy – keeping warehouse stock correct.
- Pick and pack speed – monitoring efficiency in fulfilling orders.
- Customer satisfaction scores – tracking how well customers are served.
Other useful metrics include cost per order and return processing time. Successful 3PLs often achieve order accuracy above 99.5% and on-time deliveries over 98%.
Implement a Strong Technology Infrastructure
Technology is the backbone of modern 3PL services. Investing in the right tools can streamline operations, reduce errors, and improve service.
A warehouse management system (WMS) like SphereWMS can help automate tasks such as receiving, put-away, picking, and shipping. It also provides real-time visibility into inventory and orders, making it easier to manage operations from a single platform.
Automation tools, robotics, and mobile scanning devices can further improve accuracy and efficiency. However, technology should only be added if it is cost-effective and delivers measurable benefits.
Build Strong Relationships with Customers and Suppliers
Customers and suppliers are the foundation of any 3PL business. Strong relationships improve trust, communication, and overall performance.
For customers, clearly explain your services, pricing, and potential risks. Being transparent helps build trust and avoids surprises. Good customer service ensures repeat business and long-term partnerships.
For suppliers, strong relationships can reduce costs, improve communication, and maintain quality control. Offering additional support, such as inventory management or transportation services, can also strengthen these partnerships.
Focus on Continuous Improvement
The logistics industry is always changing, so 3PLs need to stay flexible and open to improvement. Look for ways to enhance operations, services, and customer satisfaction.
Set measurable goals, track progress, and analyze results. Identify areas that need improvement and make adjustments. This approach keeps your business competitive and responsive to market demands.
Hire and Retain Top Talent
Your employees are one of your most valuable assets. Hiring skilled and motivated staff, and keeping them happy, is crucial for success.
Offer competitive pay, benefits, and opportunities for career growth. Create a positive work environment that encourages engagement and productivity. Employees who feel valued are more likely to deliver excellent service to customers.
Invest in Marketing and Sales
Marketing and sales are essential for growing your 3PL business. Promote your services to existing customers and attract new ones through online and offline campaigns.
Participate in trade shows, partner with other businesses, and use social media to build brand awareness. Strong marketing and sales efforts help you reach more clients and increase revenue.
Offer Value-Added Services
Providing extra services can set your 3PL business apart from competitors. Examples of value-added services include:
- Packaging and assembly
- Kitting
- Reverse logistics (handling returns)
Value-added services help your customers succeed while increasing your own business opportunities.
Understand Your Customers’ Needs
Successful 3PL providers deeply understand their customers’ businesses and supply chains. This knowledge allows you to create solutions that fit their unique requirements.
Stay up-to-date with industry trends so you can anticipate customer needs and offer proactive solutions.
Know Your Costs
To remain profitable, 3PLs need to track all costs, including labor, warehousing, and transportation. Knowing your expenses allows you to price services accurately and make decisions that improve your bottom line.
Be Flexible and Adaptable
3PLs must be ready to adjust operations to meet changing customer demands and market conditions. Flexibility can include:
- Adapting warehouse layout for seasonal products
- Using temporary staff during peak seasons
- Implementing new technologies like blockchain or smart contract management
Being adaptable ensures your business can handle challenges and remain competitive.
Partner with the Right Companies
Strong partnerships can help 3PLs grow. Work with logistics and supply chain companies that complement your services, fill gaps, and share your values. Effective partnerships improve efficiency, expand capabilities, and provide better service for your clients.
Conclusion
By following these best practices, 3PL providers can improve operations, build strong relationships, and grow their businesses. Focus on using the right technology, maintaining clear communication, streamlining processes, and understanding customer needs.
If you’re looking to take your 3PL services to the next level, a warehouse management system like SphereWMS can help. Our software automates your processes, provides real-time inventory insights, and supports your business growth. Contact us today to learn more or request a free demo.