Are you looking to outsource your fulfillment operation but feeling a little lost? What are the key things you need to identify a 3PL (Third-Party Logistics) to support you and your business? This can be a daunting process; we have a few tips/tricks to show you the way!
Have a conversation with your prospective 3PL(s)
We often hear 3PL’s are reliant on automated communication tools (AI anyone?) to share information with their current and/or prospective customers. If it’s difficult to get someone on the phone in the sales process, it’ll be even more difficult when you’re a customer. Find a 3PL that offers human communications before, during, and after the selection process. Your 3PL partner is a vital extension of your business! Communicate with humans.
Ask about Technology
Make sure the 3PL is operating a Warehouse Management System (WMS). Believe it or not, some 3PL’s are still operating via excel spreadsheets or using antiquated technology from the 80’s or 90’s. This will slow down the operation and is subject to error due to the manual or cumbersome nature of the work. In addition, this “manual” solution can prohibit your ability to view the status of your business (inventory, orders, etc.) on demand and in real-time.
It’s also important to make sure the 3PL employs a Transportation Management System (TMS). A TMS can be used to tackle any unique shipping rules your customers may require. In addition to shipping rules, a TMS may also be used for rate shopping. With the frequent changes in transportation costs, rate shopping will allow your business to adjust to the most cost-effective carrier when each package is ready to ship.
Transportation
While having a TMS that supports rate shopping, it’s also important to use a 3PL that has negotiated rates based on the sum of their order volume (of all their customers) and is willing to share this discount structure with you. This is one less thing for you to think about or negotiate.
Quality
Ask about their quality process. 3PL’s are the last touchpoint before your product arrives to your customer. It’s important you understand their approach to quality and their process.
Warehouse Visit
Visiting the prospective 3PL is not always a possibility for several reasons. If you can visit, do so. You’ll have a really good idea of how they operate and work as a team. If you can’t, request photos or, even better, ask for a virtual tour. We can’t think of one reason a good 3PL wouldn’t want to accommodate this request.
Onboarding Plan
What does the onboarding process look like? We have heard of some onboarding processes that take several months or more. While onboarding time is highly dependent on the complexity of your business, make sure the 3PL onboarding process is representative of a timeline you’ll be comfortable with.
TIP: unless you require a unique technology integration, stay away from 3PL’s stating several months to a year to on-board – in this case, their technology platform is likely not up to speed and can result in costly delays.
Be prepared to discuss some of the key pieces of your business:
- SKU information to include packaging & dimension information if possible
- The methods your products are selling (B2B/B2C) and
- any unique requirements associated to each channel
- technology/platforms used for each channel
- Order volumes, seasonality impacts, & trends
- Your desired timeline to launch with the 3PL
3PL’s are designed for product distribution & logistics of your business. They are the experts and will be well-versed in any of these topics, and many more, to assist you in your 3PL partnership decision. Happy hunting!
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