How good are you at what you do? That's the basic question you need to ask yourself when you consider outsourcing some of your tasks to a third-party logistics provider (3PL).

3PLs tend to specialize in specific competencies and industries. If you want to outsource, specify what you want to achieve, identify the gaps and involve all of your departments in evaluating 3PLs. Be sure the provider has the people and processes to support the changes you want to implement.

3PLs serve a specific purpose and outsourcing allows companies to avoid significant capital investment in non-core activities. As you gain experience in working with a 3PL, and they learn more about your business, you will reach a higher comfort level in this relationship.  You’ll be more able to tolerate the risk level and not have to worry about labor issues or leaky roofs.

It’s important to agree with the 3PL on your goals and expectations, and to incorporate these into a supplier agreement. Then you can use these goals as a scorecard for evaluating the 3PL’s performance.  Review those scorecards monthly to gauge performance to expectations.  Be willing to reevaluate the relationship and adjust the expectations and the scorecard if your initial agreement doesn’t fit your needs.

On the quantitative side, your evaluation may vary with the type of service and contract. In warehousing, for example, you might look at productivity through measures such as order processing time or lines picked per labor hour charged.

Check with your customers every six months to capture qualitative expectations. Ask them about the 3PL's responsiveness to customers; identify specific issues and take corrective actions.

Ideally, the 3PL you choose will become part of your business, helping you achieve your overall company goals.  They’ll just be the part of your business that you don’t have to manage on a daily basis, which gives you the time to focus on your core activities.