21 Point Checklist For Third-Party Logistics (3PL) Contracts

Third Party Logistics (3PL)

E-commerce businesses and companies look forward to 3PL providers seeking assistance for inventory, packing, shipping, and delivery of goods to customers. The 3PL services have gained a lot of popularity over the last few years. The main purpose of the 3PL service providers is to manage the supply chain of the e-commerce merchants.

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If you are also willing to join hands with a third-party logistics provider, then follow the link here. https://redstagfulfillment.com/3pl-definition-process-resources/ is a leading provider of 3PL services and facilities. Below mentioned is a checklist that you must consider when signing a contract with third-party logistics service providers.

1. Duration of the Agreement and Renewal

The contract must specify the time period of the agreement and the steps to be taken if any of the parties demands renewal.

2. Warranty

Go through the statement that explains the warranty of service in the light of that particular contract.

3. Damages

The contract must specify which party would be liable for the damages that might occur throughout the entire process.

4. Inventory

Inventory is one of the most crucial aspects of e-commerce businesses; therefore, one must always pay utmost attention to it and carefully go through all the clauses related to it in the contract.

5. IT

Both the parties must discuss the kind of IT services that will be used throughout the period and the cost and charges.

6. Reporting

The report book must be referenced in the contract.

7. Invoice and Payment

The contract must even specify the payment methods that would be acceptable. Usually, 3PL has the authority to stop the processes in case the payments have not been cleared.

The contract must also highlight the methods that must be used to settle all the legal affairs.

9. Inventory Shrinkage

The percentage of shrinkage loss must be clearly mentioned in the clause.

10. Forecasting

Weekly meetings must be organized, and both parties must attend them in order to discuss the plans and expected orders.

11. 3PL Visits

The number of visits by the 3PL must also be discussed and mentioned in the contract.

12. Account Management

The contract must also clearly state whether or not the account manager will be replaced throughout this whole period.  

13. Insurance

The contract must mention the typical insurance that each party will keep in force throughout the agreement.

14. Hiring of Employees

The agreement must clarify whether both parties can hire employees from each other or not.

15. Independent Contractors

The agreement must address the 3PL service providers as contractors and not partners.

16. Indemnification

The 3PL service providers often want the client to bear all of the expenses, which even includes the attorney’s fee. In that case, the 3PL providers save themselves and their employees from any consequences that might take place in the future.

17. Advertising

At times the agreement allows the 3PL service providers to advertise the business name of their existing partners on social media and other marketing platforms as well as resources like brochures and trade shows.

18. Assignment

According to the contract, you must check whether the agreement could be assigned to any other party without permission.

19. Intellectual Property

The contract must define all the intellectual properties in detail.

20. Termination of Agreement

Termination of the contract is another important point that makes its way to the checklist.

21. Price Increases

The contract must specify when and where the price increase would occur and how to deal with it.

Joining hands with a reliable 3PL service would be a smart move and extremely beneficial for your company in the long run.

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