3PL Selection

Sample Project

HOW TO SELECT A 3PL?

The Client
The client is a US retailer of premium furniture products. It distributes from its leased central warehouse in the Washington/Baltimore corridor and uses two 3PL’s for home deliveries and installation.

The Need
The client needed to:

  • Assess the current productivity and cost structure of its warehousing and home delivery services.
  • Identify potential alternate service providers and compare services levels and costs with its existing structure.
  • Determine the best structure and implement.

The Approach
Costs for all current warehousing and home delivery services were collected and documented for a 2 year period. Costs were broken down into individual line items for comparison purposes. Business requirements were documented.

Key regional 3PL’s were identified and contacted with an initial assessment being done of their capabilities to meet the client’s needs. An RFP was created and distributed to all potential 3PL’s. Responses were analyzed and costs documented to compare with existing costs.

The Findings
The current warehousing operation was proven to be the most cost effective solution. No changes were required in the short term.

The current costs for home delivery services were found to be too high. It appeared that the client had not adequately negotiated services and had allowed too many cost increases from its current 3PLs.

The Result
One 3PL was selected as the best alternative provider (specialized in the furniture industry and had the necessary equipment and processes already in place). The overall home delivery costs were lowered by over 20% with service guarantees being added, scheduling activities moving from the client to the 3PL, and next day home delivery being an added service being offered to the customers.

Payback for having SCS complete the assessment was approximately 45 days.