6 Things to Consider When Choosing a 3PL Fulfillment Partner
A 3PL Fulfillment partner acts as a direct connection between your brand and your consumer. You collect the orders and your third-party logistics partner (3PL) fulfills them. If done right, your consumers’ experience is no different than if you handled the fulfillment yourself.
The importance of selecting the right 3PL partner cannot be emphasized enough. However, completing that process can be quite an undertaking. To make it easier, here are some helpful tips on choosing the right 3PL Fulfillment partner:
- When Should You Partner With a 3PL?
- Consider Omni-Channel Growth and Fulfillment
- Advantages of 3PLs
- How to Evaluate a 3PL
- How To Choose Your 3PL Partner
- Your 3PL Fulfillment Partner
When Should You Partner With a 3PL?
The biggest driver for deciding when to partner with a 3PL is your fulfillment volume, and at what point that volume becomes a distraction from what should be your primary focus – growing your business.
Did you know that 86% of the Fortune 500 and 96% of Fortune 100 companies use a 3PL partner within their supply chain?
At a certain point in the history of these companies, they had to make an important decision in order to properly support their supply chain, strategic objectives, and growth. They could either make a sizeable investment in their own fulfillment or partner with an expert who can handle it on their behalf.
These three key questions will help you determine whether you need a 3PL:
What is your current daily volume and associated costs?
Once you understand your current daily order/unit/line volume, and the costs of labour/space/supplies to handle the fulfillment, you can then compare that against the calculated costs of a partnership with a 3PL. This may show that switching to a 3PL model is an advantageous solution in your current state, rather than a future consideration.
Are you running out of costly inventory storage space?
Brands often forget to include storage costs when determining fulfillment expenses. Compare your current lease/utility expenses with storage pricing estimates from 3PLs. You may find that consolidating storage costs with outsourced fulfillment is a better value for your company.
What’s your forecasted growth?
If you’re expecting a sustained surge in order volume—not just one-off flash sales or marketing promotions—estimate the costs and resources necessary to meet consumer demand in the future. Compare this with the costs of outsourcing fulfillment to a 3PL.
Consider Omni-Channel Growth and Fulfillment
With the explosion of Omni-Channel through this century, the need for partnering with a 3PL that is well-versed and executes exceptionally within each channel is key. Here are three examples of cross-channel implications in fulfillment:
While the wholesale retailer landscape is shifting, there is still a need for a 3PL that can fulfill orders properly and on time for your retail partners. One growing trend within retail is compliance requirements – such as price ticketing and pre-packing – that are asked of brands by retailers both big and small. Partnering with a 3PL who is well-experienced with retailer compliance will ensure a seamless fulfillment experience and that your product is first-to-floor.
Consumer expectations for ecommerce continues to become more strict; from the time it takes to fulfill the order, to it landing on their doorstep. A 3PL with the processes, technology, and infrastructure to handle ecommerce fulfillment is integral to this element of your business being a success.
If DTC via partners like Amazon is a channel you intend to put an effort into growing, then it becomes a necessity to have a 3PL who can handle all aspects of fulfillment. Your 3PL provider should manage compliance requirements and electronic routing, which is needed to have your product enter their DCs platform.
Advantages of 3PLs
There are numerous advantages to working with an experienced 3PL fulfillment partner. Below are four of the most significant aspects:
1. Grow Your Business
3PLs will facilitate all the important aspects of your backend logistics and fulfillment, so that you can focus on marketing and sales – the biggest drivers in the growth of any business.
2. Partner with Professionals
Investing in your own fulfillment operation is certainly an option, however, there is more to that then an investment in a warehouse, racking and boxes. You need a team of experts who have the experience in the industry, will share new solutions and knowledge, and can support your brand along its journey.
3. Limit Overhead
Leasing warehouse space, hiring an operations team, and maintaining facility assets is costly. Partnering with a 3PL can minimize costs so capital can be directed toward objectives that will generate growth.
4. International Expansion
As your brand grows outside of its domestic market, having a 3PL partner who is plugged into a large global network can prove to be a huge advantage. Once the time is right, you can launch new international locations or activate new solutions, like cross-border ecommerce.
How to Evaluate a 3PL
When considering a 3PL partner, evaluate the following criteria:
No-Hidden Fees Pricing
A transparent pricing model makes a partnership clear for both sides. Understand how the pricing works in detail and what value-added services are offered, even if VAS may not be a need now but potentially in the future.
Versatile Omni-Channel Service Levels
As brand’s become diverse in the omni-channels that they are active in, it’s important that your 3PL can support those as needed. From brick-and-mortar retail to ecommerce, making sure they are ready to go when these new channels go live will be one-less thing for you to worry about.
Ensure the 3PL can integrate in any format (API, EDI, etc.) with your existing Enterprise Resource Planning (ERP) software, webstore platform, accounting program or order management system (OMS). Integrating key points enables functions like Inbound Shipment receiving, pick/packing orders, shipping confirmations, and inventory levels to be communicated automatically between systems.
How To Choose Your 3PL Partner
Selecting the right partner is a huge decision, given the important piece they will play with your business’ current and future state. Choosing the right 3PL is equal parts analyzing data and building the relationship. Here are the critical details you will want to obtain – both from your own company and the 3PL – to help with that selection:
The Fundamentals of the 3PL
- How long has the 3PL been around?
- How has their business, team and services evolved?
- Service Level
- What is the 3PL’s the Hours of Operations?
- What are their core services within their operation?
- What value-added services (packing slip / gift-card inserts, price ticketing, retailer compliance) do they offer?
- Client Base
- Do they have strong customer references and long-term partnerships?
- Have they worked with companies in your industry before?
Your Brand’s Volume
- What is your annual volume – in units – that would flow through the 3PL per year?
- How many Inbound shipments from your factory do you receive on a quarterly basis?
- How many orders do you ship each month (in the following categories: B2C, B2B, domestic, and international)?
- What are your peak seasons?
3PL Technology & Processes
- Does the 3PL have a standalone platform you can integrate with via API, EDI or FTP?
- Does the 3PL offer automated communications for functions like order fulfillment, shipping notices, returns inspection, inventory counts, receiving reports, and adjustment notifications?
- How user-friendly is their Client-facing platform to use?
- At a high-level, what are their processes for fulfillment?
Transparent Pricing Model
- What is the pricing for the key fulfillment functions such as receiving and pick/pack ?
- What value-add services do they offer?
- How is storage managed?
- Do they have a monthly minimum invoice requirement?
- Are there any extra costs to be mindful of?
Your 3PL Fulfillment Partner
At a52 Fulfillment, we offer a solution that is tailored, integrated, and transparent. These are the three principles by which our whole company and culture are built.
We Tailor our business to yours so that a52 is enabled as an extension of your brand.
From there, we Integrate around your company’s software systems and methods to create a seamless partnership on both sides.
Lastly, a52 will always be Transparent with our operation with real-time access to our WMS client portal which is available online 24/7.
It is these core principles that contribute to a52’s successful on-demand shipping for all of our clients.
Contact a fulfillment services expert at a52 today to learn more about our solution!