The global third-party logistics industry had a market valuation of approximately $1027.11 billion in 2019, with industry experts expecting a CAGR of 7.1% to hit $1789.94 billion by 2027. In the US, the total industry revenue reached 219.35 billion dollars.
The distribution and transportation services that you pick can make or break your business. As you expand and span a larger geographical area, you may need to have a logistics services partner for smooth resource procurement and product distribution. Any mishaps during distribution and transportation may lead to costly delays and increased customer dissatisfaction.
Here are eight pitfalls to watch out for when hiring third-party fulfillment services.
1. Hiring the First Company You Meet
The key to hiring distribution and transportation services is to conduct extensive research on the experience and financial health of the third-party logistics provider. Resource and accessibility of real-time data are critical to efficiency and reliability. Verify that the company has a physical warehousing and distribution division in the region you wish to ship your product.
2. Overlooking Their Safety Record
You may need to have a clear understanding of the liabilities of the fulfillment services provider. Your raw materials or products remain in the custody of the logistics company till they arrive at the destination. You may need to assess the safety record of the transportation company. The firm should make the best efforts to ensure that your shipments arrive in the right condition.
3. Failing to Verify Their Insurance Coverage
Third-party logistics companies often hold insurance plans that cover any damage to the shipment. Inquire from the company the insurance coverage that they hold. If you feel that the amount may be sufficient, you can negotiate for better coverage or find a new logistic partner.
4. Downplaying the Effect of IT Capabilities
84% of consumers say that they would not return to a brand after just one bad delivery experience. The average consumer now expects full visibility of available inventory and real-time tracking before purchasing. You may need to invest with a distribution and transportation services company with a Warehouse Management System.
5. Becoming Short-Sighted on the Cost Factors
Logistics is more than transporting a shipment from one point to another. Cost factors may vary drastically in different fulfillment and logistics companies. You may need to be aware of the various inclusions necessary in the quotes for a fair comparison. Remember that the lowest quote may not be the best pick, while the highest is not a guarantee of quality services. Conduct your due diligence before signing the contract.
6. Not Factoring Your Future Growth Projections
You may need to find a logistics company that can handle your growth. The firm’s infrastructure should meet the demands of your growing client base and expansion. To discuss your company’s future projections, reach out to American Western Distribution.
7. Not Following Up on References Provided
You may need to request references to past clients that the Phoenix warehousing and distribution company has worked with in the past. Their experience may help point out the experience that you may have with the logistics company.
8. Choosing Only One Type of Service
This is a common mistake that can end up costing business owners a lot of money and frustration in the future. Make sure you’re choosing a distributor or transportation service who doesn’t just specialize in one area but has experience in several different areas as well. For example, a company may have access to the biggest trucks around, but if they don’t know how to load your pallets correctly, then it’s not worth your while.
Making these errors when picking your third-party logistics partner can lead to business disruption and customer dissatisfaction. If you are looking for distribution and transportation services in Phoenix, contact American Western Distribution today.
