Selecting the Right 3PL

Third party logistics providers (3PL) have played a significant role in the pharmaceutical supply chain for quite some time, with almost every major US wholesaler-distributor having a 3PL service offering.  And with the increased focus on cost reduction in pharmaceutical manufacturing, the role of 3PLs is changing and demands on these organizations increasing.

So, when selecting a 3PL, it’s important to first identify what your organization needs from this supply chain partner. Those needs vary depending on if your organization is pre-commercial, emerging or mature.  Your choice of the right 3PL for your organization and product can make the difference in a timely and successful product launch.

Price vs. service

Especially in the case of pre-commercial and emerging pharmaceutical organizations, price sensitivity can play a significant role in choosing supply chain partners. However, getting the best price up front may cost you money down the road if the 3PL does not provide the services needed to support your product’s commercialization.

 

What services do you need?

Before you can draft and distribute a request for proposal (RFP) to 3PLs, you need to determine what services you require and expect from your chosen 3PL partner.  This list should go beyond the core capabilities provided by all 3PLs. As 3PLs are evolving beyond distribution to include valued-based services, customer service is becoming a competitive differentiator.

 

Minimal services you should include in your RFP and require demonstrated success/examples of include:

  • Business reviews
  • Business and carrier updates
  • Responsiveness to changes in the industry, state and federal requirements and/or your organization or product
  • Compliance with and proactively tracking changes in the Drug Supply Chain Security Act (DSCSA)
  • Data analysis and reporting
  • Ease of selling product

 

If you are pre-commercial or emerging, understanding what you need and should expect from your chosen 3PL may be a question mark. That’s where expert advisors, like UNITE Pharma trade advisors, can assist.  An experienced trade advisor can ensure your RFP reflects what you need for a successful product launch and commercialization and review submitted RFPs to narrow options down to the most beneficial for your organization and product.

 

Selecting a 3PL

Distribution decisions are among the first a manufacturer needs to make, because 3PL partners significantly impact state licensing requirements. Many states require manufacturers to list its selected 3PL on the state licensing application; some also require a copy of the letter of intent or a fully executed contract. For virtual manufacturers, a 3PL may allow the manufacturer to operate under their licenses, reducing the legwork for state licensing.

Once narrowing down your options, on-site visits to 3PLs are recommended, although many 3PLs offer innovative virtual visits of their facilities because of restricted travel during the COVID-19 pandemic.  Whether in-person or virtual, the goal of these visits is to understand not only the processes such picking and packing but to assess cultural and value alignment through questions with subject matter experts at the 3PL.