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Finding how to choose a 3PL provider can become overwhelming when you need to focus on a particular geographic area and realize dozens of warehouses exist in the region. You may run across a few that seem perfect for logistics, yet you soon discover they don’t have the best equipment or experienced staff.
Then you have other fulfillment centers that may have everything you need, including longevity, but their location isn’t convenient for faster distribution. With frustrations like this, plus lack of time to vet warehouses, you need some expert help.
We can help you make a more educated decision on which 3PL warehouses are the best based on your geographic strategies. At the same time, we want you to know what to look out for in a 3PL provider.
You have a lot of things beyond just reputation to consider in the vetting process. With so many details involved in getting goods shipped domestically or to foreign markets, you need to dig deep in how a 3PL center operates.
One of the first things you will need to do is define your objectives clearly. Why do you need to hire a 3PL company? Which part of your day-to-day operations are you going to hand over to them? Will you be adding more services to your contract in the future? Do you want them to handle a particular product, region or location?
A 3PL contract is going to be a long-term investment. So, you will need to think about all these factors before drawing up your 3PL Request for Proposal (RFP). Don’t forget to include the metrics that define your business goals into your RFP as well.
Make a list of what needs to be shipped and to whom. You will also need to convey when it needs to be delivered to the end user. Depending on your products and target customers, you may have to use different 3PL companies. You may also need to include a few value added services such as re-palletizing or custom labeling or sharing your storage space with other companies in your contract. Put down all these specifics on paper before looking for a 3PL company.
Not all 3PL companies are made equal. Some companies develop specialties of their own, while others provide general logistic solutions. Depending on your business goals, you will need to choose a suitable 3PL company. You can classify 3PL companies into two broad categories: general purpose and niche specific carriers.
General purpose carriers can handle various tasks, ranging from storage to transportation. However, they mostly handle goods that do not require special packaging, storage or in-transit care. As a result, their services are also relatively less expensive. However, if you are going to transport perishable goods, restricted items, or medicines, you will have to look for a specialist.
Niche-specific carriers cater to only a specific industry or market. Here are a few examples that will help you understand better.
3PL companies with a robust network of cold storages often tend to cater to clients in the perishable goods sector. They also have a fleet of cold storage containers and refrigerated trucks at their disposal. They are experts at handling all types of perishable goods including fish, poultry, meat, fruits, dairy, and vegetables.
These are logistics companies with certifications to transport unique items such as organic foods or specialty drugs. They have the necessary infrastructure and well-trained staff to handle your special cargo.
The law may require you to use such a 3PL company if you are transporting special cargo. For example, for transporting specialty pharmaceuticals, you may need to work with an FDA-certified carrier.
3PL companies specializing in e-commerce sector need to provide fast and on-time delivery with minimum cancellations. For example, Amazon allows only the vendors and 3PL companies satisfying their Seller Fulfilled Prime Standards to sell prime products. You are better off hiring an Amazon Prime-certified fulfillment company for your own e-commerce store.
Speed is everything in shipping goods, and you already know this by seeing how major companies operate. Any 3PL company giving you complete efficiency requires innovative technology to help optimization of operations.
Experts note newer technologies like The Internet of Things and the cloud make 3PL companies operate faster and with more accuracy. When dealing with chain operations and freight shipping, you need immediate feedback through real-time data.
Be sure to check out what technology the company uses, and ask for a personal tour if their website doesn’t explain.
Otherwise termed “scalability”, you need to know whether a 3PL company can grow along with you once your company starts expanding. It’s worth noting that scalability means bi-directional so they can accommodate the downs in your business as well as the extreme ups.
The important thing is examining exactly how well the company can operate when you have a sudden surge in customers. Business spikes can happen virtually overnight due to publicity. Look at the 3PL’s track record and see how well they performed for others who had similar growth patterns.
It’s overall better to pick a 3PL handling both small and large businesses so you know the scalability level is flexible.
Just like investors do before acquiring a business, they need to know about how financially secure a company is. You need to do the same analysis with a 3PL since you’ll be depending on them for shipping goods long-term.
You don’t want your fulfillment center going out of business within a short time, leaving you in a desperate situation during busy quarters. The same goes for vetting the 3PL’s payment history so you know they won’t shut down for mismanagement. It’s possible to do this by looking at the 3PL’s business partners and finding out if late payments ever took place.
No 3PL warehouse can operate well for you unless they have a long history of working in your industry. If your industry is fairly new to them, you may play more risk that they won’t understand how to properly ship goods through ports and other regional outlets.
Make sure they have proper insight and close access to ports, roads, and state borders. Even if they say they can handle your industry, it’s worth remembering all industries work differently in the shipping process. As an adjunct to technology above, the warehouse’s commitment to technology can help in providing the nuances you need to make fulfillment work optimally.
Once you decide that it’s time to outsource some of your logistic procedures, you have to figure out how to choose a 3PL provider that you can trust long term. If you’ve had negative experiences with providers in the past, you know that making the wrong decision could lead to dissatisfied customers and loss of profit. If you’re venturing into the world of logistics for the first time and don’t have knowledgeable employees to rely on for guidance, it’s easy to get overwhelmed by the many providers currently fighting for your attention. This is one of the most important decisions that you will make on behalf of your company, but the following information will help you find the right provider with as little stress as possible.
Different companies price 3PL costs differently, making it slightly difficult to compare the prices. However, you can still divide the costs into five parts.
You can choose a 3PL company based on the location of your target consumers. Their strategically-placed distribution centers will shorten the length of the haul, reducing transportation costs. They will also have a better understanding of local traffic fluctuations and seasonal changes in transportation availability, resulting in on-time delivery.
The more the number of strategically-placed warehouses and distribution centers, the higher the cost savings will be. However, you can’t compromise the location with the quality of service. The carrier still needs to provide you with on-time performance, lower product damage, billing accuracy, and fewer delivery irregularities.
You shouldn’t overlook the reputation and experience of a 3PL company. Once a 3PL starts handling your logistics, your reputation goes into their hands. Plus, it’s a long-term commitment that requires considerable investment. So, it is better to know how good a 3PL company is beforehand.
Find out –
Get answers to all these questions before taking the next step. It is always preferable to work with a 3PL company that has a stellar reputation in your niche. It should also have at least a couple of years experience. Thorough research is key here.
Logistics is a complicated business that profoundly relies on sophisticated technologies such as Warehouse Management Systems (WMS) and Transportation Management Systems (TMS). These technologies offer real-time visibility and analytics. Your 3PL company should also show technological finesse.
They should have the necessary technology to automate and integrate into your order routing and storefront inventory management tools. Try to find out –
Make sure their technology is sophisticated enough to handle your present as well as future inventory requirements. It should be able to scale as your business expands or when the demand rises during the holiday season.
Along with financial health, the 3PL company will also need to be prepared to face unexpected disasters. There may be a labor shortage, an accident or break down or even a weather-related emergency. Is the 3PL company capable of handling these situations?
Hiring an asset-based 3PL company can prove helpful in this regard as they have more control over their asset recovery. Check the company’s financials or talk to their ex-clients to find out how they have dealt with such situations in the past. You can also ask them to provide a contingency plan to mitigate such disasters.
Communication is at the heart of a successful partnership with a 3PL company. 3PLs need to have a direct line of communication with their clients as well as their carriers, suppliers, shipping companies, and vendors. The 3PL should provide you with access to their administrative support, complete visibility for each order, and real-time data and reporting.
They should tell you when an item will be picked, when it will reach its destination, who is carrying it, and if there any problems in the delivery. This communication line needs to be impeccable and stay open 24X7.
It’s unfortunate that too many businesses take fulfillment warehouses at face value and assume they’ll work on automatic pilot doing shipping duties. Not knowing what’s actually going on in the warehouse can come back and haunt you if you don’t go and see for yourself.
If you haven’t done an in-person walk-through of your warehouse, do so as soon as possible. You’ll be able to scope out a lot of issues you otherwise wouldn’t if you just go by what someone else tells you.
A full audit of how well the warehouse conducts their services could take more than one trip. Even so, it’s worth it to know they’re living up to what they promised in the contract.
Have all technology used in the warehouse assessed as well to make sure it’s up to operational standards. Finding any outdated technology there may require updates to keep your logistics competitive.
Some assessments can work without in-person visits, and looking at data through a metrics platform saves you time. Make sure your warehouse uses analytic tools regularly with easy accessibility at all times. By allowing you access on any mobile device, you’ll have freedom to check out the numbers on how well your fulfillment center operates daily.
Metrics programs also give you summations over periods of time. Now you can do annual assessments to compare with the previous year.
Those who do all the warehouse tasks know what’s going on more than management does. That’s because they’re the ones in the trenches doing all the physical labor. They’ll know where the real problems are, as long as they’re transparent about it.
Interview the staff individually so you can get different perspectives on how well things operate there. When you assess all their opinions, you get a better picture of how well they function based on the procedures management set in motion.
The concept of benchmarking is a proven method in warehouse assessments since you can use comparisons based on others, as well as your expectations. Using your warehouse contract as a guide, you can see where the fulfillment center needs to improve for the future.
Through the employee interviews above, you’ll weed out small things that could make a big difference in how fast you get deliveries out to customers.
You may have specific goals for taking yourself to the next level. Doing benchmarking helps you see whether the warehouse is truly up to this in the next year. Comparing with what similar businesses and warehouses do helps you make a more educated decision about whether to continue your fulfillment relationship.
The process of selecting a 3PL provider starts with answering each of the following questions to assess your needs and identify your expectations and goals:
After answering these questions, you should have a clear understanding of what services you need your 3PL to provide today and in the future. Use this information to study providers and select only those able to meet your expectations consistently.
Armed with the answers to the above questions, you’re ready to start comparing providers. The first step is to contact us or visit our website to start the process of receiving your free 3PL quotes, but you will still need to make the final determination on which of those providers may best serve your needs. You may want to ask the following questions before making that final decision, but add other questions that relate to your business needs as well:
In order to make sure you find a good 3PL company that offers competitive pricing and will provide quality service, you have to take extreme precaution in the selection process. Follow these simple additional steps and you’ll end up on the right side of the coin.
You will cut most of the stress out of this process just by using 3PLCompanies.net to secure quality recommendations tailored to your business. We go through the enormous 3PL provider market and weed out the bad seeds so that we can suggest reputable, hardworking providers that customers like you can trust. You still have the final say on which provider you select, so it never hurts to check out our recommendations.
Are you trying to determine how to pick the best public warehouse for your business? This is a common question that many consider when outsourcing their warehousing. So we’ve compiled a listing of the most important things to consider when trying to pick the best public warehouse.
As with shopping for most business services, the stakes for selecting an outsourced fulfillment services vendor are extremely high. The selected fulfillment company will store all of your product, pick and pack shipments to customers, and generally serve as the entire back end of your company. This is an enormous responsibility, not to mention that if things end up going wrong, changing providers is beyond difficult. So choosing the best fulfillment firm for your specific needs that will perform high quality work is critical to not only the success of your business but also the minimization of any potential disasters or headaches with logistics. So with such an important decision on your hands, what are the most important things to look for in a provider? Take your time selecting a provider and put them through the below tests in order to find the best fulfillment company for your business.
This is one of the most frequently used tactics for selecting a service provider, so you should definitely include it on the list. However, be careful not to give it too much weight in the decision. Providers can give you references for their happy customers, which may or may not be a good indication of your company’s success with their service. Ask the references if they’ve experienced any challenges with the provider and attempt to get insights into how the vendor performs when faced with challenge.
There are numerous credentials, awards, and certifications for third party fulfillment companies. Some credentials and certifications are relevant for certain types of commodities, such as food grade commodities. Other awards are given to fulfillment companies for exemplary service in the industry. Ask the potential provider if they have any awards or certifications. While absence of these indicators isn’t the end of the world, understanding each company’s accomplishments will help you with your decision.
Even though warehousing and shipping seems like a relatively simple operation, there are so many factors that make it quite complex for many businesses. For example, companies with unique requirements, kitting projects, and a high number of SKUs are just a few of the examples that can make this seemingly easy function difficult.
It should be of no surprise that many of the companies out there have trouble when it comes to routinely and accurately shipping products for customers. So, take a critical look at anyone that you consider, because you don’t want to be caught behind the eight ball with shipping errors.
How much experience a company has is a critical factor for success. After years of experience and seeing a multitude of scenarios, fulfillment companies are better able to handle new challenges and operate more efficiently – which leads to lower costs of service. And don’t forget to ask for customer references!
Fulfillment houses are notorious for offering complicated pricing structures that are especially difficult to compare among competing proposals. First and foremost, ask each company to provide ALL pricing information, so that there are no surprises. Furthermore, make sure that you get some mock shipping charges so that you fully understand the price of shipping that would be passed on to your company. Finally, with regard to pricing, ask as many questions as necessary with each provider so that you fully understand their pricing enough to compare them with other companies.
Of course, many would argue that the company with the lowest prices would be the best way to go. Sometimes, however, you get what you pay for. Use your common sense — when a company comes in much lower than others, you might want to consider why. If something seems too good to be true, it probably is. Furthermore, quality is extremely important. For a company to provide high quality services, they won’t necessarily be the cheapest company out there. Some of the fees may include a minimum fee, storage fees, and pallet fees. Ask questions and compare fee structures.
There’s no better way to get a feel for a company than to physically meet with them and tour their facility. This may not be possible in some instances, but it is preferred. By visiting with the company, you’ll be able to meet staff, see with your own eyes just if the warehouse space is organized, and get a feel for the company. If you’re considering using companies out of your area and can’t visit them, try to replace a site visit with phone conversations and a video tour of their facility if relevant. Nonetheless, you’ll no doubt be able to gauge whether or not the facility is clean and well organized just by getting a quick walk through.
One way or another, also be sure to get a good feel for the people that you would work with. These will be the individuals that you interface with for day to day operations and when problems arise – so it’s important to have similar values.
Check into the size of the facility and number of employees to get a feel for the potential vendors’ ongoing viability and experience. Again, this isn’t a complete deal breaker if the company is smaller than other options, however, you should be aware if the company’s owner is picking and shipping orders, as the vendor may either be more of a start up company. This will be a risk factor for you to consider amongst other alternatives. Newer businesses might offer more flexible pricing and terms, but may not necessarily have the experience required for more complicated projects. On the other hand, some of the more established firms may be overly expensive and geared more towards businesses that ship in high volume.
Ensure employees care about the quality of their work. This facility will be an extension of your business and are a link to your clients. Do the employees handle your merchandise with care? Are they well trained to avoid errors?
Location is a critical factor when making a selection for fulfilment provider. It’s usually a function of where your product is manufactured or procured and where your customers are located. Many companies unknowingly believe that it has to be located close to them – which may be helpful if you are more “hands on” and would prefer to keep tabs on your partner while building a closer relationship. But keeping an open mind will open up avenues that could lead to increased performance, lower costs, and less headaches.
Especially if your commodities are expensive, you’ll want to make sure that the fulfillment company has adequate insurance to cover the contents of its customers. In order to protect yourself, you can ask to be added as an additional insured under their policy. Furthermore, some companies prefer to bring their product in from overseas into a free trade zone facility. Only a select number of companies have this status, so it’s something you’ll have to dig into in order to find out the specifics.
Many fulfillment houses specialize in processing orders for certain commodity types. Because they’re specialized, they can, in theory, produce better results for their clients. For example, companies that specialize in apparel warehousing may have unique equipment to be able to store and ship these unique products better than a general warehousing facility. Depending upon your product type, look into the types of commodities that each prospective vendor targets and factor this into your overall decision.
Historically, warehousing companies have used multi-year agreements in order to hedge some of their risk of investment, and add price discounts as an incentive. Of course, these agreements add risk to you, since you’ll be locked into using their services or pay penalties if the agreement is broken. On the other hand, some companies don’t require any term to their agreement whatsoever. Be sure to check into the length of each potential contract so that you understand all of the ramifications of your decision.
It’s not a matter of “if” the chosen provider will make an error shipping, but rather “when” the company will make an error. The high quality companies just don’t make many of them! So do yourself a favor and find out who will pay for errors when they take place. Highly credible companies will take ownership of any errors that take place and will have a methodology for correcting errors.
For some companies, it’s important to secure the best freight rates possible in order to pass on the lowest shipping totals to customers. And for companies that ship LTL (less than truckload) and full truckload shipments, costs can be significant. So learning whether or not the company has it’s own fleet for shipping, has contracted rates for small package and LTL shipping, and what discounts will be available are crucial to making the best decision.
Many online merchants and ecommerce sales companies have a great need for a high tech oriented fulfillment provider. In this case, they may need to integrate their shopping cart with the 3PL’s warehouse software, receiving real time inventory and reporting information, and get customer’s shipping tracking information each day. Some fulfillment firms are more equipped to handle these specific needs, so finding out if the potential provider offers e-commerce fulfillment services will be a make or break decision.
Try and get as much information as possible about the systems in place that ensure efficiency and customer service needs. When was their computer system last updated? Do they perform updates and maintenance on their systems frequently? Can they integrate with your shopping cart if applicable? What types of reporting is offered?
Most high performing organizations have standard processes and procedures in order to ensure limited errors and successful operations. Nowhere is this more important than in logistics. If a potential provider doesn’t have a documented listed of procedures, it should serve as a relatively large red flag. Furthermore, the best companies will have processes in place to measure their performance and a schedule for reviewing their performance with you, at least on a quarterly basis. You can ask each provider for historical accuracy rates. This will give you some idea of how well the company performs in terms of on time shipping and accuracy of shipments to customers.
Just as in any other industry, businesses come and go in the fulfillment and shipping industry. One good way to make sure that your fulfillment partner will be here to stay is to conduct some sort of financial viability analysis on the company. For example, you can either run a credit check on the company or ask the firm for some financial information. Your main objective is to make sure that they’re a going concern, with a solid financial foundation for the future.
The level of service you get from a fulfillment company will be a function of the size of your deal and the type of provider you choose. In other words, if you have a high volume of storage or orders, you’ll probably command a great deal of service and attention. However, if you’re a smaller company, then you may have to search more strategically for a public warehouse that will give you the best mix of service and pricing.
One of the things you will have to consider when you are choosing a fulfillment company is the size of your business and whether it truly makes sense for you to work with one of these companies, at least yet. Some of the fulfillment companies out there have volume restrictions in place. This essentially means that if you are not selling a lot of products, they might not want to work with you at all because they do not see it as financially viable for them.
However, there are also plenty of fulfillment companies out there who are more than willing to work with startup companies who are still growing.
Another factor when choosing your fulfillment company is the size of the products you are selling. Some of the companies, for example, are only capable of handling smaller items. They might not want to handle larger products. Others might only want to deal with larger products. Make sure the company you are considering has the capability and desire to work with with the items you sell whether large or small.
What types of sales channels are offered through the fulfillment company? Are they providing direct to consumer fulfilment? Do they provide fulfillment to businesses, or to employees through a store? Understand the sales channels your company needs and then find a company that can handle them for you.
You should also think about the types of services you might need. Is everything you do rather straightforward and simple, or do you often need to have kits or bundles put together? What about your company and your products might make it more difficult for the average fulfillment company to handle? Understand what additional services you might need and how flexible you need the fulfillment company to be. This will help to ensure you are working with the right company that “gets you” from the start.
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