Measuring 3rd Party Logistics

Posted by Kristen Melendez on Thu, Oct 31, 2013 @ 09:00 AM


How do you know if a 3PL provider is organized and established enough to ensure your product gets to stores on time in an accurate, professional manner? With so much product on their hands in so many different locations, 3PLs can be difficult to manage. They can fail to arrive on time. They can struggle to meet demand. But, thankfully, some 3PL companies offer data about their distribution hubs so you can know, exactly, what to expect when you do business with them.

Here’s some data that you should expect from good 3PLs.  

Volume Fluctuations

As a store owner or manager, you know about supply and demand, about ordering correct, lean amounts of product so you aren’t overstocked during down seasons and under-stocked at peaks. A good 3PL provider can ensure this is the case: that you get what you need, when you need it, no matter the situation. How does a 3PL make known their ability? Talk to them about their ability to handle volume fluctuation. How often has product been unavailable in their warehouse? How do they manage cycle-counts (quantities-on-hand) to ensure that product gets replenished at the warehouse? Like you, 3PLs need to be able to provide product to their customers. In this case, the customer is you, and the 3PL provider should be able to meet fluctuations in demand. 


What’s their fleet of trucks like? Is it contracted, or does the 3PL own and manage their trucks and drivers? This can be imperative when meeting set deadlines and delivery dates. How will the 3PL handle overnight deliveries, special requests, add-ons. You need the product your customers want, whenever they want it. So make sure the 3PL has a good history and reputation when it comes to timely, professional deliveries.


Collect data about picking accuracy from your 3PL provider. How often are they sending you product you didn’t ask for or failing to send product you need? You should be able to expect a high rate of accuracy from a 3PL provider. It’s a competitive field out there, so if your 3PL isn’t accurate, you need to look for a new provider. Expect no less than a 90% accuracy rate. MKM’s accuracy rate, for example, is at 96.5%

Employee Turnover Rate

How often is your 3PL turning over employees? Do they hemorrhage valuable talent due to mismanagement, poor wages, unfair work schedules? Unhappy employees lead to picking errors and a lack of concern about product damage. Instead, when a 3PL has happy, motivated workers, you feel good about your product in their hands. You trust them to get it to you on time. You trust them to correct their mistakes when they occur. Research the turnover rate of the 3PL you’re working with—or the 3PL you’re interested in hiring—to know if their employees are happy. At MKM, we know the value of our employees and know that, when they have steady, relevant careers, our employees work more accurately and they stay at the job. That’s how we’ve been able to maintain a low turnover rate of 6%. 

Look for transparency, attention to detail and operational knowledge when scouting a 3PL provider. You want a provider who has a foundational understanding of logistics, not just an understanding of warehousing software.

With these, what other qualities do you look for in 3PLs? Let us know in the comment section below. 

Topics: 3PL, Logistics, Fulfillment, Inventory Management