E-commerce businesses are increasingly leveraging the advantages of collaborating with Third-Party Logistics (3PL) providers. Many are reassessing their existing solutions, as opting for a proficient 3PL can bring notable benefits to your business. Given the array of providers and associated costs, the challenge lies in making the right choice. This guide is designed to assist you in selecting the 3PL partner that aligns with the specific needs of your business.
STRUCTURE YOUR RESEARCH FOR CHOOSING A 3PL
Whether you begin your search with recommendations, conduct a web search, or consult an online directory, it’s beneficial to commence with a set of questions applicable to each 3PL candidate. Evaluating responses systematically will reveal variations and unique qualities among 3PLs, presenting valuable insights.
Below are some insightful questions that can aid in gauging how well a prospective 3PL partner aligns with your requirements, comprehends your products, suits your geographical needs, leverages relevant technologies, adjusts to your sales channels, and provides the necessary support.
MATCHING YOUR REQUIREMENTS
- What choices and trade-offs exist between costs and service levels? A reliable 3PL partner will elucidate your options in terms of cost versus service. Ensure a fair comparison of 3PL service costs by being in an apples-to-apples mode.
- Is this intended to be a transactional arrangement or a long-term partnership? Engaging in a meaningful dialogue with a potential 3PL partner is crucial. Pay attention to the questions they pose, as their curiosity about your business and willingness to discuss your needs can be indicative of alignment. According to “3 Downsides to a 3PL RFP. And, what to do Instead,” a partner who actively learns about your priorities is valuable for evaluating a long-term 3PL partnership. Such a partner can assist your business in adapting and thriving through dynamic business cycles.
- How established is the 3PL, and what is their track record of success? Evaluate their business tenure, examine available case studies, and consider any industry recognition they may have garnered.
- What level of flexibility does the 3PL offer concerning your needs? Will they provide tailored services, or must you conform to their systems? An effective 3PL partner will construct a solution precisely tailored to your requirements.
- What are the 3PL’s performance metrics? It goes beyond merely shipping out orders; it involves consistently achieving accuracy and earning customer loyalty. Metrics such as order cycle time, crucial in meeting customer expectations, and the order accuracy rate, expected to be at 99.9%, are pivotal considerations.
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PRODUCT AND INDUSTRY KNOWLEDGE
Choosing a 3PL provider with expertise in your specific products and industry can prove highly advantageous. This choice can potentially minimize the learning curve and mitigate expensive delays or errors during the initiation of your order fulfillment operations. An adept 3PL partner is likely to possess the necessary skills to establish optimized processes and procedures for your business. For instance, crafting an order fulfillment solution tailored for health and wellness products and dietary supplements may necessitate compliance with distinctive lot and inventory control requirements, possibly requiring an FDA registered facility. Similarly, fulfilling orders for personal care products may demand specialized processes and technologies. It is prudent to contemplate the following questions:
- Is the 3PL familiar with your product categories?
- Do they comply with any particular regulatory or operational criteria essential to your business?
- Can they offer specialized services, such as kitting, that you may require?
- How does the 3PL plan to train warehouse personnel in accordance with your handling specifications?
- To what extent can the 3PL adapt to construct the warehouse and fulfillment solution that aligns with your specific needs?
Geography: Places
Regardless of whether your business operates within a limited or extensive geographic area, the choice of location for an order fulfillment partner holds significant importance. Consideration of future growth plans can also play a role in this decision-making process.
- Does the 3PL provide a network of multiple warehouse locations to cater to a national marketplace?
- The ability to ship in proximity to your target market can significantly influence shipping costs and the speed of reaching customers. For instance, certain national retailers leverage a combination of West coast, East coast, and Midwest fulfillment centers.
- Are the warehouses strategically positioned, such as near major transportation hubs, to ensure swift and cost-effective service?
- Can the 3PL adjust your solution in alignment with your growth plans?
- Is the 3PL equipped to facilitate international ecommerce if that becomes a requirement?
Foundational Technologies
Resilient technologies tailored to suit your business requirements empower you to deliver exceptional customer service and cost management, providing real-time visibility into order fulfillment activities and inventory. As elucidated in “Order Fulfillment Technologies for an End-to-End Solution,” integrating order fulfillment technologies can confer a competitive advantage to your ecommerce and retail fulfillment operations. Reflect on the following questions:
- Does the 3PL provide technological capabilities that align with your operational requirements?
- Is there a comprehensive warehouse management system (WMS) in place?
- Will you have access to a secure, private portal that offers the visibility and reporting functionalities necessary for your operations?
- Can the 3PL seamlessly integrate with other applications you utilize, such as an ecommerce platform?
- What is their level of expertise in dealing with these external applications, and what are the initial integration costs involved?
Distribution Channels
- Which sales channels does the 3PL accommodate?
- Do the supported channels by the 3PL align with your existing sales strategy and future growth plans?
Examine your comprehensive business model. If your fulfillment requirements extend beyond B2C ecommerce orders, either currently or in anticipated future scenarios, selecting a provider with complete D2C, B2B, and omnichannel capabilities could facilitate the seamless coordination of all facets of your supply chain management across various channels.
Exclusive Assistance
An ideal 3PL provider will familiarize themselves with your business and apply their experience and expertise to meet your requirements. Here are some questions to help you assess the value of the support:
- Will you be assigned a dedicated account manager?
- What is the structure and staffing of the customer service setup?
- Can you anticipate proactive communications from your partner, and are they open to innovating solutions with you?
- Will the 3PL conduct regularly scheduled business reviews?
- How does the 3PL demonstrate accountability to your business?
- Is there an established system for continuous improvement in place?
Are you seeking a 3PL provider or a genuine partner? An optimal 3PL partner will leverage expertise in order fulfillment processes and technologies, industry knowledge, and actionable insights. They will implement processes and technologies that not only save costs but also propel the advancement of your business
Useful Assets
If you’re exploring a 3PL provider for your store, explore “How to choose a 3PL partner for your store” . Learn how appropriate ecommerce technology integrations can enhance order cycle management and foster customer loyalty. Uncover essential elements for an order fulfillment Service Level Agreement (SLA). Connect with one of our experts and share more about your goals.