F. Curtis Barry & Company Blog

After months of working with prospective third-party logistics (3PL) vendors, you likely received hundreds of pages of selling materials and many verbal promises. A contract will memorialize:

• the statement of work (SOW) and the 3PL services you are contracting for
• the standards of performance
• the pricing of various 3PL services
• the payment terms
• a host of legal clauses such as warranty and guarantees, and termination of the agreement

This blog acts as a checklist of contractual considerations to assist you in negotiating a 3PL contract that is fair and a win/win for the client and the 3PL provider acting as your outsource fulfillment provider. 

Using third party fulfillment (3PL) partners for fulfillment can provide tremendous benefits for your multichannel and e-commerce business. One way some companies use 3PL is as an additional warehouse in their distribution network. A strategically located warehouse can reduces ship time to customer as well as shipping costs.

Many direct and e-commerce businesses make strategic and cost-effective use of third-party logistics (3PL) to provide warehousing and distribution services which include order fulfillment for clients. At the heart of this process is finding 3PL companies that provide fulfillment services that are in line with your needs and supply chain strategy. The following six criteria should be used to determine which 3PL companies are a good choice:

With the recent growth in online demand, it is putting more constraints on supply chains and distribution space.  This often means that facilities are filling up faster than expected.  This challenge also occurs when companies acquire brands or expand into a new line of business, and the associated inventory is being transferred into the existing warehouse space. 

Peak period order volumes often stress fulfillment processes and labor requirements which may cause decreased customer service and drive costs higher.  Process exceptions and errors are magnified by order volume. How well did your fulfillment center perform in the last peak season?  Do you have a plan for improvement to scale to the next peak season’s projected volume?  This article details how to identify the operational changes to evaluate, and possibly change, to make the next peak season more efficient.

For many companies, trying to recruit and retain hourly workers is one of their biggest fulfillment challenges.  Automation and technology have evolved dramatically in the past five years.  In many solutions, the cost of technology has decreased below that of the average worker when you consider the fully loaded labor costs for benefits, taxes, training and recruitment. This is discussed later in this article.

With shipping volumes remaining at record levels, most all freight methods and carriers have struggled to keep up with the demand. This has led to skyrocketing prices on everything from inbound container loads to small parcel ground delivery. Managing these ever-increasing transportation costs and changes in service levels has become increasingly more complex – especially in the small parcel arena. First, we will discuss the rates increases. Then, how we can assist you in taking action.

In the cost per order, labor generally makes up more than 50% of the total costs (total costs being direct and indirect labor, total facility costs, shipping materials, etc.) excluding inbound and outbound shipping costs. As hourly wage rates continue to increase, overall warehouse productivity in many companies has remained flat.  As a result, the cost per order and units of work produced (i.e., shipped orders, returns, picked lines, and units, etc.) has increased. 

One of the most frequent themes we hear from clients when discussing layout and design projects is that space capacity is a concern in the current facility. If a new facility is not in the future for your company, how can you continue growing sales and inventory, knowing you only have the current space to work with. Let’s make the assumption that your company is already fine-tuning inventory forecasting and removing excess and aged inventory – what are the next steps? 

This article looks at some of the ways changes to the layout and design can help to improve capacity and extend the life expectancy of the current space.

As a basic principle, companies need to ensure that the operations are as efficient as possible, increasingthroughput as much as possible while maximizing the capacity and utilization of the space before opting to move to a new facility.  It is critical that the operations have truly taken advantage of the existing facility, due to the high cost of relocating distribution center operations.  

Relocating a facility can, at times, be inevitable, but the disruption of business and impacts on labor mean that you must at first be sure that you have maximized the existing facility. In addition, most major markets are at record levels of warehouse occupancy rates, and lease costs are at all-time highs.  New warehouses being built on speculation are large centers that may not be suitable for small to moderate-sized businesses.