Category Archives: Warehousing and Fulfillment Resources

Information about warehousing and fulfillment for those new to warehousing and fulfillment.

4 Questions to Ask When Selecting A 3PL

As a whole, third party logistics companies have not progressed as rapidly as they should have in terms of transparency, technology, flexibility and communications protocols.  There are several speculations as to why this happens, but realistically, third party logistics providers can neither afford nor justify the necessity to take the risks required to stay ahead of the curve with newer technologies and policies.  Luckily, there are a few things you can watch out for when selecting a 3PL for your company.

How long has the 3PL been in business?

Believe it or not, although this seems obvious, this question is actually not to verify reputation or stability.  There is an obvious correlation between the longevity of a 3PL provider’s time in business and their ability to maintain up-to-date policies and procedures.  If a provider has been in business long enough to have evolved through several decades of changes, you then need to determine where they currently stand in terms of technology, communications, transparency and flexibility.  More times than not, you will find that the companies that have been in business through many transitions are more up to date than those with only a few years, or less, in operation.  More importantly, the 3PLs that have been in business through many transitions will also have a much better ability to adapt to future technologies and trends.  A company that has only been in business for a short time will have most likely utilized all of its resources to purchase the software, hardware, machinery and resources necessary to operate within current standards (or perhaps even slightly antiquated standards), but will not have the ability to adapt to any necessary changes within the near future.

Does the 3PL have multiple locations?

It isn’t so much the size of the 3PL, or even the number of locations, but the fact that a 3PL has multiple locations is a direct example of the company’s ability to network and provide communication between multiple locations, which directly relates to the ability to communicate to their customers.

Does the 3PL have a web presence?

While certain companies seem to be under the impression that a web presence isn’t for everyone, the truth is, when relating to any business, it is for everyone.  It is a necessity.  Notice however this was not limited to a “web page”.  There is much more that goes into a successful 3PL then a simple static web page.  There should be details, functionality, interaction, customer portals, billing and payment options, account/inventory access, communication tools and more.  Social networking and integration should play a part as well, so you are able to see reviews, testimonials, feedback and more.

Does the 3PL provide adequate transparency?

There are several debates on the effectiveness, and even the definition of transparency, when referring to third party logistics.  While some companies maintain that their expertise and experience should be sufficient in proving their standards of service, this is a very antiquated argument.  With today’s technological advances and communication protocols, companies should be able to see much more than they are accustomed to.  Real-time inventory tracking, account management, invoicing and account history, inbound and outbound activity, delivery and pickup scheduling, activity logs and more should all be made available to your company by any third party logistics provider.  The transparency of a logistics provider is imperative to ensure that your company is able to monitor all KPI’s (Key Performance Indicators).  Without the ability to monitor the performance of a third party provider, you lose control of your overall performance indicators to your customers.

With these tips to look out for, you will find an ideal 3PL for your company, which will lead you to a greater profit margin and better success and satisfaction rating overall.  Remember, when selecting a 3PL, you are putting the performance of your company in someone else’s hands, so you should make sure they are up to the challenge.

Fulfillment Partner

Finding the Right Fulfillment Partner for our Growing eCommerce Business

Guest Blog by Tom Schwab

The wonder of eCommerce is that it allows customers throughout the world to find your product day or night.  The ugly reality is that when that customer reaches the check out page they want two things:  They want it fast and they want free shipping.  Both are the number one reason for shopping cart abandonment.  Fail to meet either condition and you risk loosing the sale either to another website or a brick and mortar retailer that can provide faster availability.

Our niche direct to consumer medical products company was forced to expand from a regional player to a national provider.  Our customers would take their crutch alternatives with them on vacation.  Where they went, the call and orders followed.   Due to the size and associated dimensional weight of the product, air shipments were prohibitively costly.  Ground shipments while reasonably priced could take up to four business days from our Midwest location.  For patients struggling with the pain and limitations of crutches this was an eternity.  To continue to expand our business we needed to address this real logistical constraint.

As we searched for a fulfillment partner on the internet we were met with frustration.  The 3PL companies that ranked highest in Google were on page 1 for a reason:  They were big.  It was clear that they were not interested in small accounts by their responses.  Multi-year contracts, expensive set up fees, minimum shipment, minimum floor space and the need add expensive software to transmit orders all scared us away.

On the opposite side of the spectrum, there were many companies that claimed to do 3PL in addition to their core business.  What it was in reality was an attempt for them to fill empty warehouse space and provide an additional revenue stream in a down economy.  Questioning them about their process proved we could not count on them to provide our level of service our customers.

After months of dead ends that educated us what we could not accept and what we could not afford, we stumbled across WarehousingAndFulfillment.com, an easy to use online service that looked at our specific needs and gave us a quick quote of 5 potential fulfillment partners that potentially met our needs.  Beyond a simple matching service between eCommerce companies and 3PL providers, they had pre-screen the warehouses.  All the discussions with the potential partners were efficient, informative and addressed our needs.  Finally, we had choices instead of frustration. Within days we had chosen our partner and our product was on a truck headed for them.

We’ve now used the WarehousingAndFulfillment.com services 3 times as we’ve added additional 3PL partners throughout the US.  Clearly they have been a key resource for us in harnessing the incredible potential of eCommerce.  Now no matter where in the US the customer finds us, we can deliver to them in just 1 to 2 business days with free ground shipping.

Tom Schwab is an entrepreneur who has transformed a regional player into a national leader using the tools of a connected world and the strategy of Inbound Marketing for eCommerce.

Third Party Warehousing

Is Third Party Warehousing More Cost Effective Than In House Warehousing?

by Will Schneider

A great number of product based businesses consider outsourcing with a third party warehousing company as a viable option for handling the warehousing and distribution of their product. But once they begin researching these third party providers, they oftentimes get hit with “sticker shock” in terms of storage and fulfillment fees. They often think to themselves, “Is it cost effective to outsource?” Or better yet, “Will cost savings be realized by outsourcing warehousing and fulfillment?” These are extremely important questions that need to be analyzed from a detailed financial perspective in order to gain appropriate insights to make the best decision.

Do You Know All of Your Warehousing Costs?

One of the most difficult aspects of any in house versus outsourcing financial analysis calculations is the gathering of ALL “in house” costs. If any of these costs are left out of the equation, you’ll surely not be able to gain the proper perspective in your decision. What kinds of costs need to be included?

  • All salaries, benefits, insurance, and employee related expenses
  • All management expenses related to storage and distribution
  • All warehouse lease fees, including insurance
  • All materials costs, including packaging materials, etc.
  • All equipment costs, including ongoing maintenance costs and support equipment such as pallets, racking, computers, scanners, scales, etc.
  • All customer service expenses for support with your customers and any related benefits, insurance, and employee related expenses
  • Any software expenses related to inventory management and order management

Some of the most commonly overlooked areas are equipment purchases and adequate measures of management support related to the fulfillment process. Without a thorough analysis, you’ll potentially be left thinking that outsourcing isn’t the best option when in fact using a third party warehousing solution would be the best way to go.

The Added Benefits That Get Overlooked

In addition to forgetting to include certain in house costs, another common mistake is not accounting for other added benefits of outsourcing your third party warehousing. Some of these “intangibles” can really provide significant savings. They include:

  • Ability to use as much or as little space as needed for warehousing, thereby eliminating the risk of warehouse leasing and time spent negotiating
  • Synergy from opportunity cost of not having to spend valuable internal resources on distribution, thereby increasing time spent on other more important functions such as sales and marketing

Properly accounting for all costs and benefits will help you make the best decision regarding the use of third party warehousing. Don’t be short sighted when looking at the pricing proposals from fulfillment companies. Take into account all costs and you’ll set your business up for the greatest success possible.

Keep Your Shipping Costs in Line

Blog Post Written by Scott Reynolds, American Western Distribution

Keeping Your Package Shipping Costs in Line – Small to mid size companies

Shipping packages has become increasingly more expensive with the cost of fuel continually on the rise. Companies need to keep a close watch on these costs. It pays to review your invoices regularly for mistakes and insure you are charged correctly. Was the package a residential or commercial delivery? It matters, delivery to a business is less costly than to a residential address. Was the fuel surcharge invoiced correctly? Finding these mistakes can save money.

Another method of lowering costs is through increased volume. Each time you sign a new account, check with your carriers to see if they can offer a higher discount with the additional volume. We recently were fortunate enough to acquire a new account that will be shipping thousands of orders per month. This volume could have a great impact on our shipping rates, for all our accounts, and also put us in a position to acquire additional new business as a result of reduced rates! We called our carrier reps in for meetings to see what programs were available to us with this new business. Allow plenty of time for this. The reps are busy people and they tend to travel a large area so they may not be able to see you for a week or longer. The various carriers have many different programs to offer plus they have partner programs with each other that can offer additional savings! Once you receive the cost analysis back from the carriers, compare them and don’t be afraid to ask for a better rate if the first analysis isn’t what you were expecting! If you don’t ask, you won’t receive. We did and the rates that came back to us averaged another 3 to 4% discount!

Make sure to compare fuel surcharges (FSC). This also can greatly affect the total cost. Some companies charge a percentage of the delivery cost and others charge by weight. Depending on the type of product you are shipping there could be tremendous savings by choosing the company whose FSC best fits your needs (providing their basic rates are competitive). In this particular case we saved $.32 cents on the average order just on the FSC not to mention the basic rates were the most competitive offered!

Another method of keeping your package shipping costs in line is through the carrier pickup. Most carriers charge a fee for this service that can be waived if you are near their drop off location and have the ability to deliver the orders to the terminal yourself.

From startup companies to small companies to midsized companies, shipping fees are a large percentage of the total cost charged for your services. As a result you need to pay due diligence to this segment of your cost structure as it could make or break you in efforts to signing new accounts and keeping current customers!

About American Western Distribution, www.awdaz.com located in Phoenix, AZ, specializes in providing World Class Warehousing, Distribution and Logistics Services. AWD receives product for companies that don’t want the expense of a ‘brick and mortar’ organization but require our services for storage, order fulfillment and distribution of their products. All of our programs are custom tailored to meet each customer’s needs!

What to Look for in an E-Commerce Fulfillment Company

by Will Schneider

When it comes to choosing a company to deal with your e-commerce fulfillment, it’s important to know what to look for in order to save time, money, and prevent headaches in the future. With an experienced fulfillment company by your side, you can streamline your process which lowers operational costs and gets your products to your customers’ front doors as quickly as possible. Here is a short list of the things that matter most in terms of logistics companies so you can rest assured you are choosing the right one for your individual needs.

Experience. Some e-commerce business owners choose any fulfillment company to process their orders, but only some have the experience that is necessary to do so effectively. The difference between traditional fulfillment companies and e-commerce fulfillment is that the latter exchanges information over the Internet as opposed to via telephone, fax, or email. As you can probably guess, this is a much quicker way to get the order processed and out the door; therefore, looking for an experienced e-commerce fulfillment company is important for timeliness purposes.

Prices. Of course when it comes to logistics services it’s tempting to choose the option with the lowest price tag. Unfortunately, however, that approach can turn out to be a costly mistake in the long-run. While it’s important to compare prices, it’s important to never sacrifice experience for pricing. Finding the right balance between cost-effectiveness and quality of services is the safest and most reliable way to get the right services without breaking the bank.

How to Pick the Best Public Warehouse

by Will Schneider

When it comes to making business decisions, choosing to outsource public warehousing only goes so far. Instead, it’s vital to pick the right public warehouse that truly save money and time.

Public warehousing is a strategic decision made by a company, but choosing the warehouse that best meets a company’s needs is often overlooked. Public warehousing is usually used for short-term storage solutions, such as holding extra products during busy seasons. But it’s important for a business to select one that meets all of the company’s demands. So here are some things to look over when choosing the best public warehouse:

Be Strategic – A decision process should definitely be used that involves several levels of management. Make sure put the appropriate time and analysis into the selection process and just don’t pick the first public warehouse that’s listed.

Begin with Detailed Location Analysis – One of the advantages of public warehousing is not being tied to a single geographic area. In-house distribution may be in New York but with public warehousing a company can choose a place that can better serve customers elsewhere. Request for a proposal from the public warehouse, this may give insight on the market that works best for the company.

Know System Capabilities – Make sure that the public warehouse provides the necessary system support – not only for current production but future advancements.
Leave Room to Expand – Usually public warehousing is short term, however, businesses should consider future expansion plans that could turn the contract into something more long-term.

Evaluate Public Warehouse Networks – Again, a lot of preparation is looking down the road. Look and see if the provider’s other locations may be beneficial to future expansion. Does the company allow movement into new and profitable markets?

Timing is Everything – Find out how long it takes to move and start using the public warehouse. This should give an idea of how long the process will take and how much money it will actually save.

Visit the Site – This seems like an obvious step but sometimes businesses jump into things without even seeing a public warehouse. Examine the facility’s cleanliness and maintenance standards and how was the relationship of employees and management. These are all indicators of a well-managed public warehouse.

Check Independent Sources – Make sure to evaluate independent references. They usually have insight of how the public warehouse is run and how it helped out their business.

What do Fulfillment Companies Charge?

by Will Schneider

One of the most frequently asked questions that we receive through our site is “what do fulfillment companies charge”? Of course, this is somewhat of a complicated question to answer, but we wanted to give those new to “fulfillment” a broad idea of the types of charges that they’ll encounter should they decide to outsource their fulfillment.

We understand that in order to decide whether you should do fulfillment in house or outsource, you have to have an idea of the costs of third party fulfillment. Before we elaborate on some of the more common charges, we wanted to give you a few words of wisdom when comparing costs. First, when comparing to the costs of doing it in house – make sure that you’re looking at all of the costs that you’ll incur to do the fulfillment in house. This means that you can’t ignore things like management time and the most commonly overlooked cost – opportunity cost (what you could have done with your time had you not been, for example, on the warehouse floor shipping packages). Second, when comparing costs among various outsourced fulfillment companies, make sure that you’re comparing apples to apples. This is a very difficult task, because for some reason many fulfillment companies like to make things extremely complicated! But beware, because what seems like good pricing at first glance may not be the best option when you look at all of the fees.

Okay, so on to the most common fulfillment charges! These are the most common types of charges that you’ll see in the fulfillment industry. If after looking at these charges you’re interested in getting “live quotes”, then just let us know and we’ll get you connected.

  • Receiving to count and enter your materials into inventory (each time they receive inventory)
  • Storage of goods per pallet per month (or square footage or cubic footage)
  • Processing of orders either a flat per order fee OR a per order fee combined with a per item fee
  • Shipping charges (usually a discount off of published rates – and most likely better than you’d be able to get on your own)

There are other fees that vary from company to company – such as account management, fees to interface with a shopping cart, returns fees, etc. Remember, keep a close look on all of the charges when comparing costs – not just between fulfillment options but also when you’re comparing against keeping it in house.

Why Small to Mid-Sized 3PL’s Excel for Small Businesses

by Will Schneider

If you’ve ever researched a fulfillment company and looked at some of the large fulfillment companies like Amazon Fulfillment, then you know how frustrating it can be to simply get a live person on the phone. We recently had a company use our service to find a fulfillment company because after they filled out four quote requests on Amazon’s site, still nobody had contacted them. And even more interesting…there was no phone number on the website.

Now, don’t take us the wrong way – there are plenty of customers that are extremely happy with these types of companies and we’re sure that they do a great job of fulfillment overall. But to the small to mid-sized business that needs extra attention and prefers to actually get the chance to speak to a representative over the phone, there may be better options.

There are a number of very high quality small to medium sized 3PL companies that not only do a great job of fulfilling orders accurately but also offer a higher degree of customer service. It can be very critical for some companies to be able to speak with their fulfillment company in order to communicate the specific needs of their storage and distribution. Furthermore, it’s more realistic that significant relationships can be forged with the management at these 3PL companies, which can prove to be invaluable during different stages of the relationship as well as offering another key consulting advice to help your small business grow.

And finally, these smaller to mid sized 3PL companies usually offer very competitive pricing. Oftentimes, pricing is noticeably lower than pricing with the larger scale companies.

So remember, there are so many variables to consider when outsourcing your fulfillment and distribution, so take a look at all of the options in order to choose the best fit for your company.

Choosing a Pick and Pack Company for E-Commerce

by Will Schneider

With so many pick and pack companies out there, how do you know who to choose when it comes to fulfilling orders for your e-commerce business? The one thing you can be certain is that most pick and pack companies are going to tell you that they’re good at all types of fulfillment services, from retail and product fulfillment to e-commerce fulfillment. But there really are a select few that truly specialize in the intricacies of e-commerce fulfillment. So knowing what to look for will help you make the best decision.

E-commerce fulfillment involves shipping orders that come from an online web store (also known as a shopping cart). There are so many web stores and shopping carts to choose from – each with their own programming language and technology. Pick and pack companies that truly focus in on e-commerce fulfillment have the ability to integrate with most shopping carts seamlessly, meaning that they can automatically receive all of your orders from your website as well as send you back any information that you need after the packages are shipped (such as tracking information). There are a lot of details that can cause trouble and confusion when exchanging information between your shopping cart and your pick and pack company – from SKU information to handling charges passed on to customers to what happens if someone requests a change to their order after it has been submitted. This is why it’s important to have a pick and pack firm that knows what they’re doing.

Some of the questions you should ask your pick and pack company before making a decision:

What kinds of shopping carts can you integrate with?

What happens if a customer makes a change after the order has been submitted to you?

Can you update my shopping cart with the shipping costs?

Taking a thorough look at the pick and pack companies before making a selection can mean the difference between tremendous pain and great success.

What’s the Best Location for a Fulfillment Company?

by Will Schneider

Many small and medium sized businesses are searching for a fulfillment company to store and ship their goods for them. But determining where the fulfillment company should be located can be a great challenge. Of course, most businesses would prefer for a fulfillment company to be located right down the street. This way, they can easily travel to them to check on stock and in case there are any issues. While this isn’t a bad strategy to employ, looking at the world this way could also lead to missed opportunities.

First and foremost, finding a fulfillment company right down the street doesn’t necessarily mean that they’re going to be the best fit for your business. There are so many other factors that mean a great deal when considering who to choose to perform your outsourced warehousing and distribution. Other things could have a big impact such as the specialty of the fulfillment company and their pricing. For example, most people wouldn’t know this because most third party fulfillment firms tell you that they can do “any” project, but the reality is that most fulfillment vendors focus on certain types of clients. Some are really good at e-commerce fulfillment, while other are really good at retail fulfillment to retail stores. Furthermore, there are some really good fulfillment companies that offer great service and some of the most competitive pricing, but if you won’t consider anyone outside of your city, you might miss on these potential cost savings.

Second, a huge indicator of costs involved in any fulfillment project is shipping. If you choose a fulfillment company right by your company, it may or may not be the best decision to lower your overall shipping costs. Two factors come into play when making this determination – where your product is manufactured and where your customers are. For example, if your product is produced inChinaand most of your customers are inCalifornia, then it would make sense to located a company in or near a major port inCalifornia. And for many companies that ship to customers all across theUS, finding a fulfillment company that is centrally located may be the best option.

As you can see, this is no easy decision. But taking into account all of the factors, instead of just looking at convenience, will lead to the best decision overall for your company.