The Top 3 Reasons Why Companies Change 3PL Providers and How to Avoid Them

The cornerstone of success for a 3PL company is the ability to retain existing customers while attracting new clients. Not surprisingly, it is often more difficult to attract new customers than it is to keep existing clients from being enticed to try another 3PL company. By devoting increased attention to improving customer service, affordable pricing, and user-friendly technology, a 3PL company can help prevent existing customers from straying to a competing 3PL provider. Below are the top 3 reasons why companies change 3PL providers and the strategies you can take to keep your customers.

How Poor Customer Service can Cause Customers to Change Providers

Clients enlist the help of a 3PL company to help their operations and shipments flow smoothly and seamlessly. In many cases customers are completely dependent upon their 3PL provider to supply the following important pieces of information:

• Order updates

• Shipment tracking information

• Inventory availability

When a 3PL provider fails to provide requested information promptly and accurately, the result is customer dissatisfaction. Most customers who employ the services of 3PL companies have clients of their own who urgently require updates on their orders and failure to properly respond can result in a negative chain effect of lost customers. One or two episodes of poor responsiveness can cause a customer to consider switching 3PL providers.

How a 3PL Company Can Make Customer Service a Top Priority

The best way that a 3PL company can help prevent client loss is to constantly emphasize the importance of outstanding customer service to 3PL employees. Specifically, employees should be trained to focus on the following key elements of the customer service process:

• Responding promptly to customer phone calls and electronic correspondence
• Providing regular updates on order progress
• Ensuring that customers receive tracking information following shipments
• Promptly addressing order inaccuracies and returns

In addition to reacting quickly to customer inquiries, 3PL employees should be encouraged to proactively provide information and data to customers. By going beyond the call of duty and being proactive, a 3PL company can maintain a high level of customer satisfaction.

Technological Inefficiencies Can Ruin a Customer Relationship

Outdated technology can drastically impede the efficiency of a 3PL company. No 3PL customer wants to hear the reasons behind a delayed shipment. Customers hire 3PL companies because 3PL firms offer supply chain expertise. They should not have to worry about the failed integration of their 3PL provider’s software systems. While every organization experiences sporadic technological difficulties, 3PL companies have a responsibility to ensure that their software systems are current and designed to be compatible with existing technology.

How to Prevent Technological Failures from Driving Customers to Competitors

There are multiple measures that 3PL companies can take to ensure that their technology is updated and primed to handle the addition of employees, large orders and future anticipated changes. By taking the following steps, 3PL companies can help make sure that shipments are not delayed due to technological inefficiencies:

• Ensure that all employees receive thorough training on software systems

• Formally review the effectiveness of systems at least once per quarter

• Invest in sufficient software licenses and make sure they are kept up to date

• Request a demo of a new software system prior to purchasing the system

Why Price Remains a Significant Factor in Customer Abandonment

Anyone who has worked in management for a manufacturing company knows that competition within the 3PL industry is increasing every day. New companies that are hungry for business will often promise to beat any competitor’s price simply to get a foot in the door. While these new competitors may not necessarily offer a higher level of service, the fact remains that some customers can be lured to another provider if there is a significant price difference.

How to Prevent Customers from Choosing a Lower Priced Competitor

In addition to reviewing pricing structures on a quarterly basis, 3PL companies need to make sure that they take other measures to help prevent customer loss due to price. Suggested measures include the following:

• Continually work with freight carriers to obtain better rates

• Survey existing customers at least once annually about value and pricing

• Ensure that customers are comparing apples to oranges when reviewing 3PL providers

By striving to consistently improve customer service, technology and price, a 3PL company will help solidify relationships with existing customers and help prevent them from turning to a competitor.

Different Ways AI Has Reshaped Operations

A slew of new digital technologies is disrupting supply chain operations, but none is having more of an impact on the industry than artificial intelligence (AI).

Let’s take a brief look at three areas in which AI has made the deepest inroads.

Transportation Management Solutions (TMS)

By integrating AI technology, new platforms are enabling companies to streamline their transportation systems and cut the costs of freight. TMS applications, even without AI, have been helping companies improve performance in the following ways:

• By optimizing truckload routes and less-than-truckload shipments

• By identifying potential multi-stop routes

• By analyzing data to determine areas affected by late deliveries.

Adding artificial intelligence into TMS systems allows operators to mine a trove of additional data, such as weather conditions and traffic congestion, to improve performance even further.

Warehouse Management Systems

In the same way that it is enhancing TMS systems, AI is also injecting new proficiency into the Warehouse Management System (WMS).

Warehouse management is increasingly making use of machine learning technology, which can extract an avalanche of data to calculate the time needed to perform warehouse tasks and balance pick density targets.

Procurement Communications

Developments in AI technology have made it possible for machines to communicate in similar ways to humans, allowing companies to speed up and enhance interaction with their suppliers.

Leading the field are chatbots, which allow text-based interactions, for example, between procurement managers and their suppliers’ systems. AI-based applications can extract data from multiple sources and provide answers in seconds. They can also answer text-based questions and pull up documents and files instantly. 

Other Uses for AI in the Supply Chain

Because of its flexibility, companies are using AI to tackle all sorts of supply chain challenges. The best-known examples are the deployment of robots and automated guided vehicles (AGVs) in the warehouse. But there are other utilizations, such as:

• Planning truck-loading to maximize space

• Making pick-to-light warehouse systems more efficient

• Decreasing order cycles through fulfillment-source optimization

• Developing the spatial-awareness capacities of warehouse robots, using machine learning and computer vision

It is clear that AI has become a game-changer in enterprise generally but especially in supply chain. With today’s fierce competition for supply chain superiority, the logistics industry could well become the testing ground for even more sophisticated AI-powered technologies.

Ecommerce and its Effect on 3PLs

Online shopping is one of the fastest growing industries today. Everything from electronics to grocery is just a few clicks away. With several new online retailers coming up every month, e-commerce giants are also feeling the heat of such competition.

On the other hand, consumers are also becoming increasingly demanding. The consumer satisfaction ratio is going up. As a result, many online stores have started providing same-day delivery.

To ensure timely deliveries, ecommerce stores need to handle issues related to inventory, packaging, warehousing, shipping, and tracking carefully. Having a location near their core consumer base can help ensure speedy delivery. That’s where 3PL service providers come into the picture.

Cost Reduction (Saving Time and Money)

Setting up a complete warehousing and shipping system from the ground up is a costly affair. Your business has to bear the burden of various costs including infrastructure, advanced technology, transportation, and employee compensation.

You will also need to invest a lot of time and energy into setting this up and running it every day. But, outsourcing this work to a pre-established 3PL organization will save your time and money.

Most third-party logistics companies also charge you based on your usage. If you have a warehouse of your own, you will be spending a lot of money on its maintenance and repair regardless of whether it is in full, partial or no use at all.

Similarly, you will also be paying for all your shipping, warehousing, and tracking technology and employees irrespective of their actual usage. So, hiring a 3PL service provider is the best way to save substantial money and time.

Better Coverage

Setting up comprehensive inventory management and shipping system requires you to create a network of warehouses, couriers, and shipping centers across the globe, especially if you are going to serve a global clientele.

It is not only expensive but also time-consuming. A third-party logistics company, however, has access to a vast network of resources to meet your daily shipping and warehousing demands immediately.

A 3PL provider can quickly integrate your supply chain into the markets where your business doesn’t have an established presence. Thus, it offers better delivery coverage compared to your in-house warehousing system at a lower cost. You can grow your business without diverting your financial resources.

Higher Consumer Satisfaction

A 3PL service provider can increase consumer satisfaction in two ways. It will allow you to focus on your core business activities and ensures efficient delivery. Many companies want to focus on what they do best which isn’t shipping and warehousing.

That’s why keeping your focus on in-house warehousing activities will undermine your abilities to deliver core services. For example, an online t-shirt printing business can focus on creating better and new t-shirt designs and strengthen product quality if it outsources the shipping to a third-party logistics company.

Plus, owing to their extensive resources and well-trained staff, a 3PL service provider ensures risk-free and timely delivery to your consumers. You can also get a host of value added services such as repacking, gift-wrapping, sub-assemblies, and just-in-time services to improve your consumer satisfaction considerably.

Speedy Delivery

In the early days of ecommerce, consumers used to buy online to avoid standing in long queue at stores or driving to the nearest mall. It was all about shopping from the comfort of your coach. So, using snail mail or postal delivery services could work.

Today, however, customers need ecommerce retailers to provide same-day delivery or express delivery. But, a third-party logistics company can provide your business with speedy delivery.

They already have a well-established network of warehouses, advanced technology, and trained staff. They can keep track of a package from start to end and readily overcome international shipping issues. Plus, their credibility depends on delivering packages to the right place, at the right time, and in proper condition.

Flexibility and Scalability

Many online businesses have to scale up and scale down their operations according to the market fluctuations. Your business will experience many busy and slow times during the year. For example, your orders will pick up during the holiday season.

Usually, a 3PL service provider will allow you to scale space, labor, and transportation according to your current inventory. Thus, you can rent out more warehouse space during the holiday season and less space during off seasons. They also offer freight or cargo consolidation.

If you have several small packages to be shipped to the same location, a third-party logistics provider can club them into one big package. It lowers the cost of shipping significantly. You can get access to several comprehensive logistics plans like this one at affordable rates and flexibility.

In recent years, your online business needs to deliver an order in a time frame and cost that customers want. Though ecommerce giants have financial resources, they don’t have to set up in-house logistics system. Third-party logistics providers can provide you with the perfect leverage in this changing ecommerce environment at a fraction of the cost. Hopefully, knowing how your business can benefit from a 3PL company will help you enlist their services soon.

LTL and FTL: What's the Difference?

When it comes to shipping freight, there are a multitude of different options, and narrowing the field down to just one can be confusing. There are many different factors to consider including price, the type of shipment, the size of shipment, and the speed in which the shipment needs to be delivered.

In this article, we’ll discuss the differences between LTL and FTL shipping, and help you determine which shipping method is the best fit for you.

LTL ( Less Than Truckload )

LTL shipping stands for less than truckload, meaning that the shipment will not take up an entire truck.  These types of shipments typically weigh between 100 and 10,000 pounds.

With an LTL shipment, you only pay for the space in the truck that you need. For example, if your shipment only takes up one-third of the space on the truck, you only pay for one-third of the truck. The rest of the truck will then be filled with other small shipments from other companies, making LTL freight shipping a great choice for small businesses that don’t ship in large quantities and are looking for something that is budget friendly.

LTL freight shipments will often take a bit longer to reach their destinations, due to the multiple shipments on board creating frequent stops. If time is of the essence, you may want to consider FTL shipping.

FTL ( Full Truckload )

FTL shipping stands for full truckload, meaning that the shipment will take up an entire truck by itself. FTL shipments are typically used when there are ten or more palettes that need to ship.

It’s generally pretty easy to know when your shipment needs to be shipped via FTL, but sometimes smaller shipments can also benefit from FTL freight shipping. If your shipment is high-risk, FTL may be the better option.

FTL shipments stay on the same truck the entire time and aren’t transferred during transport, so there is significantly less risk of damage. This method of transportation is also much quicker than LTL, since only one shipment is on board and there won’t be multiple stops along the way.

When deciding on the most appropriate type of shipment for your freight, always keep in mind the size of your shipment, your budget, how fragile the freight is, and how quickly you need your shipment to reach its destination. If you have a large shipment that’s delicate in nature and needs to arrive quickly, FTL is your best bet. If your shipment is small, sturdy, and not in a time crunch, LTL will fit your needs.

How Social Media has Impacted the Trucking and 3PL Industry

The logistics industry relies heavily on technology for everything from route planning to rate calculations and load optimization to shipment tracking. Customers also use technology, both in business and in their personal lives. 

Social media is one of the hottest technology areas in marketing, and many customers and prospects check social media before making a purchase, both to get a feel for the company and to see what existing customers have to say.

Companies in all industries use social media to connect with their customers on a frequent basis. It can be ideal for introducing new products and services, explaining parts of an offering and gaining credibility as a subject matter expert in your area. For a 3PL, having an effective and credible social media presence is the best way to show customers that your team is comfortable using technology, a critical measure of 3PL service.

Effectively using social media enables the 3PL to gain customer intimacy by monitoring customer sentiment in response to its own efforts as well as what customers say about competitors. First, however, you need to discover which social media sites your customers use most. Once you know that, the insight gleaned from this dialog can pinpoint gaps in services and areas ripe for improvement.

However, social media is an active activity. Unlike the ballfield in “Field of Dreams,” if you build it, they won’t necessarily come. You must provide a reason for them to visit or follow your social media efforts, and that requires regular commitment. Your first decision when you decide to enter the realm of social media is to establish a cadence for posting new content. Whether you choose to post daily, weekly or biweekly is less important than keeping a schedule of which your followers can rely.

Content is the means to drive traffic, but not all content is created equal. There are important steps that you must follow to keep readers interested:

1. Don’t make your posts all about you or your services. If followers find your posts are all self-serving, they will stop following you quickly. It’s OK to make some posts about you, but most experts recommend no more than one out of every five to 10 posts be exclusively about your services.

2. Vary topics. One post might be about upcoming legislation that affects the transportation or marking of certain goods, while the next might be an explanation of how the customer benefits from cross docking and how to get started. The important thing is that the topics are of interest to customers, and that your content provides new and interesting insight.

3. You can also adopt a theme to drive traffic. For example, if you specialize in handling chemicals, periodically post about green efforts in the chemical industry. You might decide to post occasionally about “last mile” delivery experiments, such as drone delivery, Uber-like services or pickup depots for e-commerce purchases. Readers who are interested in the topic of your theme will come back again and again, especially as your posts gain a reputation for smart content.

4. Avoid fluff. Fluff is any content that doesn’t include education, entertainment, or impact. You will not build a reputation as an expert with this type of content.

5. Spelling, grammar and formatting matter. Be sure content is edited and professional, otherwise this hinders credibility.

Social media marketing is a way to attract companies searching for new 3PL partners while at the same time demonstrating familiarity with industry issues and technology. Your competition is using social media. You should too.