Daily Archives: March 8, 2016

Provider Sustentation 69: 3PL Firms

Just like 3PL firms were the first provider damnation we covered, they are also the first provider sustentation we are going to cover. For many under-staffed, under-supported, and under-platformed logistics departments, 3PLs are a blessing because, without sufficient staff to analyze options or modern technology platforms to crunch the numbers, 3PLs offer the organization an instant cost savings, a substantial time savings, flexibility, and, presumably, focus. But, as we said, these advantages are there for a reason — to cloud the disadvantages that 3PLs also bring. 3PLs are a true double-edged sword that, depending on the angle you see it from, shines as bright as the sun or drowns you in the darkest night of the abyss.

As we clearly said in our damnation post, in exchange for:

  • cost savings, the organization gets IT headaches
  • flexibility, the organization gets a loss of visibility
  • focus, the organization gets a complete loss of control


  • the 3PL uses its own TMS, and doesn’t give a damn whether or not it integrates with any of your systems
  • the 3PL contracts the carriers, and if it the carrier gives you sucky service, too bad as you’re stuck with them until the contract is over (which could be a while if it services the 3PL’s bigger clients good)
  • the 3PL manages the carriers it contracts, the lanes they take, the cross-docks they use, and so on and as a result your visibility into where your stuff is at might be limited to expected ship date, current status, and expected delivery date

But all is not lost. If you properly pre-qualify, properly pre-nup, and properly (pre-)define the commitments, you might only see the bright and shiny side of the double-edged sword — the side that cuts through your problems and leaves only cost savings, flexibility, and focus in its weight. Of course, to do this, you have to make sure that:

  • during the pre-qualification phase you
    • be sure to dig-deep into the TMS, out-of-the-box integration support, data import/export options, and timelines for custom integration
    • be sure to ask a lot of questions about standard carrier contracts, common carriers, selection process, and the input you can have over it
  • during the proposal phase you
    • make sure the provider gives commitments on system integration timelines, carrier selection process, issue response and resolution times, and support availability
    • make sure the 3PL provides active references of a similar size, proof of necessary insurance or regulatory approvals, and other documentation that will be needed upon signing
  • during the final contract pre-nup phase you
    • make sure the carrier agrees to penalties if integration dates are missed, deliverables are late, or promised performance never materializes
    • make sure the organization can back out if problems persist or go beyond a certain point of severity

As we said before, the right 3PL, that is properly selected, agrees, and adheres to the right terms and conditions, will be a lifesaver for many companies, but the wrong one could bring the organization to its knees. So it’s critical to select the right 3PL.