As your logistics outsource partner, 3PL providers help grow your business by ensuring accurate and on-time order fulfillment. Supply chain operation is a critical segment of your business in which anything can go wrong, requiring quick fixes to avoid disruption. So, we’ll explore some warning signs you should watch out for while evaluating a third-party logistics partner.
Between 2025 to 2033, the global third-party logistics [3PL] market is anticipated to grow at a compound growth rate [CAGR] of 8.20% reaching a value of USD 2,642.60 billion by the end of 2033. The magnitude of the market denotes that most businesses today are partnering with a 3PL for supply chain efficiency and business growth. It tells us the significance of partnering with the right third-party logistics provider for the success and growth of your business.
An efficient and dependable partner works as an extension of your business and helps streamline operations, improve delivery times, and enhance customer satisfaction. It can’t be denied that a 3PL provider can potentially make or break your business with costly disruptions that affect your brand reputation. What happens if your inventory is not updated or your shipments reach late to your customers and they start complaining?
A little vigilance can go a long way and help you catch on 3PL performance issues if you are aware of the red flags or warning signs you should regularly look out for. While numerous 3PL providers compete ‘tooth-and-nail’ for your business, you have a lot at stake, including operational efficiency, customer satisfaction, and brand reputation. Let’s delve deep into the cautionary signs you should look out for specifically while evaluating a 3PL.
Warning Signs To Identify a Risky 3PL
Outsourcing your supply chain and logistics operations is a significant decision because anything can go wrong, which might result in losing control of your business. Also, it is necessary that you do thorough research before hiring a new third-party logistics provider, as it will directly impact customer satisfaction. Here are some of the red flags you need to keep watching:
- Shipments getting delayed – Today, when 63% of customers expect 3-day shipping, any shipment delay will likely lead to customer complaints and damage your brand’s reputation. If your 3PL cannot act fast in organizing on-time shipments, it can also affect your profitability. Apart from that, if your customers complain about receiving incorrect orders, that’s a red flag you need to beware of. Look for the underlying issues that might be causing it, such as process inefficiency, understaffing, or the inability of the 3PL to scale operations per your business growth.
- Substandard customer service – When interviewing them for a probable quote, you should assess a 3PL based on how they treat you. They should put their best foot forward when you are at the consideration stage. You should observe minutely whether they have a customer-first attitude, without which it can become difficult for you to deal with them once you become a paying customer. You need a 3PL partner that works as your extended team, making your life easier by deftly handling all your logistics issues.
- Poor communication – Effective communication is the key to efficient logistics handling, leading to customer satisfaction and revenue growth. Customers today want to get an update about the status of their order and if there’s any probable delay in delivery. Your 3PL partner should proactively keep your customers updated on the status of their orders through real-time tracking. It is a red flag if your 3PL partner doesn’t answer your customer queries effectively. You should immediately take action.
- Inadequate technology – Effective logistics management today heavily depends on advanced technology that involves smart systems for inventory management, real-time tracking, and others. You need constant access to the numbers to make informed decisions at the right time. If your 3PL falls short in the standard of technology they use or provides you with a complicated system, it is a red flag you shouldn’t ignore.
- Inferior return processing – Returns are integral to an online retail business. Customers today expect a hassle-free return process. It is thus crucial that your 3PL should be equipped to handle peak season order fulfillment and returns processing equally efficiently. During Holidays or other peak seasons when sales spike, returns also increase in leaps and bounds. Handling it efficiently gains you a loyal customer.
- Reviews – One effective place to look out for before shortlisting a 3PL partner is to check the reviews on websites like Google or TrustPilot. Before contacting a 3PL for an interview, you should check out the reviews because that gives you a much better idea about the competency of the 3PL than the numbers they present. Study each review carefully, and try to understand what went wrong for the reviewer. In the long run, it might save you from many problems due to getting stuck with the wrong 3PL partner.
Conclusion
Partnering with the right 3PL provider is not only about convenience but also enhancing the performance and protecting the integrity of your supply chain and logistics system. An inefficient 3PL is likely to damage your brand reputation and affect business growth. Hence, it is essential that you always stay vigilant for the red flags mentioned and never compromise on the standard of customer experience.
Ensure you catch on to the early signs of any operational bottlenecks, shipment delays, or poor communication and dig deeper into the causes. Always remember that the most suitable 3PL partner will work closely with your team as an extension of your brand, help you enhance customer satisfaction, and thus gain customer loyalty. It is always better to catch those warning signs early and terminate your engagement before it can cause any serious damage to your business. It will make all the difference between sustainable business growth and costly setbacks.
If you need experienced 3PL services for a long-term partnership, Connect with XPDEL.
About XPDEL:
XPDEL helps eCommerce brands accelerate their growth, empowering them with multi-channel fulfillment, whether shipping directly to consumers, delivering to businesses, or selling through retail stores. We are founded and operated by veterans with experience from Amazon, FedEx, UPS, JDA, Walmart, Target, and other leading companies in eCommerce and Retail. Guided by these experts, we provide customer experiences that help you grow your business.
