Whether you have been considering the decision to outsource your order fulfillment for the first time or are looking for a new provider, don’t let this choice be a daunting task. There are hundreds of order fulfillment services providers. The key is for you is to find the right vendor that can become an extension of your business. You need a vendor that you can trust and that is easy to work with as well as have the best interest of your business in mind. Be methodical and follow a consistent set of steps to get you to the desired result.
The first order of business is to develop a viable list of vendors that fulfill the same type of products and for businesses similar to yours – i.e. hard goods, apparel, continuity, literature/collateral, etc. All product categories are different in how they are fulfilled and the operations and systems needed to support your business. You want a vendor that has the experience and knowledge already established.
Once a list of vendors is identified you must focus on the formal Request For Proposal (RFP) to be developed. In order for an order fulfillment services company to accurately bid on your business you have to provide them with accurate information about your business. Not only do you need to provide annual statistics (orders, shipments, average lines per order, average units per order, purchase orders, etc.), but you also need to detail these volumes out by month to highlight any seasonal peaks you may have. If you do not stipulate these details, an order fulfillment services provider may assume that it is a relatively flat business and they can handle the increased business on a monthly basis with no problem. Along with these annual statistics, you need to provide your projected growth for the next two to three years.
Also, specify in the RFP what your performance level standards are, such as all receipts processed same day, all in-stock orders fulfilled in 24 hours, etc. One of the goals with outsourced order fulfillment services, is to have your business run as efficiently as or better than it is being done currently. If an order fulfillment services vendor cannot perform to the standards you have or questions the standards set, it may not be the right vendor for your business.
Order fulfillment vendors do not all price for their services in the same way, which will make comparing their bids to ensure you have accounted for all the costs. We have found that developing a cost per order analysis is the best way to get a common thread amongst the vendors. A cost per order analysis not only allows you to compare the vendors against one another, but also compare them to your internal costs.
In addition to evaluating the RFP responses from the cost perspective, you want to evaluate the 3PL vendors with regard to systems and reporting. You will need to see that each vendor’s system will give you all the functionality that your are requiring to support your business and customers. You need to be certain that the system can be integrated with your internal business systems currently used at your company. In the case of reporting, make certain the reports that the vendor provides are adequate and will help in the daily management of your business and customers.
Perform additional due diligence by speaking with some of the vendor’s clients. Prepare a list of questions in advance to be consistent and document the responses during your call, so you can have another item for comparison. You will want to get a mix of clients that have just recently started utilizing a vendor’s services; for six months up to a year, and some clients who have been with their current provider for three years or more. This will give you a recent experience as well as long term perspectives from the vendor’s clients.
Once you are down to the two or three finalists, you will want to make a visit to these vendors' facilities. Again, make a list of items to discuss/review with each vendor and observe the facility - is it clean, organized, seem to be efficient with the different processes observed, etc. You will also want to meet and “interview” the account manager that will be handling your business. Document your observations for yet another set of comparison items to review after all of the visits are completed to narrow the final decision-making process.
Following these steps will provide consistency in the evaluation process and aid in your decision regarding the best order fulfillment services provider you can find for your business at a cost that you can afford. We work with all different sized businesses that are looking to evaluate 3PL vendors as either a primary fulfillment house, or as a second warehouse location.
The first order of business is to develop a viable list of vendors that fulfill the same type of products and for businesses similar to yours – i.e. hard goods, apparel, continuity, literature/collateral, etc. All product categories are different in how they are fulfilled and the operations and systems needed to support your business. You want a vendor that has the experience and knowledge already established.
Once a list of vendors is identified you must focus on the formal Request For Proposal (RFP) to be developed. In order for an order fulfillment services company to accurately bid on your business you have to provide them with accurate information about your business. Not only do you need to provide annual statistics (orders, shipments, average lines per order, average units per order, purchase orders, etc.), but you also need to detail these volumes out by month to highlight any seasonal peaks you may have. If you do not stipulate these details, an order fulfillment services provider may assume that it is a relatively flat business and they can handle the increased business on a monthly basis with no problem. Along with these annual statistics, you need to provide your projected growth for the next two to three years.
Also, specify in the RFP what your performance level standards are, such as all receipts processed same day, all in-stock orders fulfilled in 24 hours, etc. One of the goals with outsourced order fulfillment services, is to have your business run as efficiently as or better than it is being done currently. If an order fulfillment services vendor cannot perform to the standards you have or questions the standards set, it may not be the right vendor for your business.
Order fulfillment vendors do not all price for their services in the same way, which will make comparing their bids to ensure you have accounted for all the costs. We have found that developing a cost per order analysis is the best way to get a common thread amongst the vendors. A cost per order analysis not only allows you to compare the vendors against one another, but also compare them to your internal costs.
In addition to evaluating the RFP responses from the cost perspective, you want to evaluate the 3PL vendors with regard to systems and reporting. You will need to see that each vendor’s system will give you all the functionality that your are requiring to support your business and customers. You need to be certain that the system can be integrated with your internal business systems currently used at your company. In the case of reporting, make certain the reports that the vendor provides are adequate and will help in the daily management of your business and customers.
Perform additional due diligence by speaking with some of the vendor’s clients. Prepare a list of questions in advance to be consistent and document the responses during your call, so you can have another item for comparison. You will want to get a mix of clients that have just recently started utilizing a vendor’s services; for six months up to a year, and some clients who have been with their current provider for three years or more. This will give you a recent experience as well as long term perspectives from the vendor’s clients.
Once you are down to the two or three finalists, you will want to make a visit to these vendors' facilities. Again, make a list of items to discuss/review with each vendor and observe the facility - is it clean, organized, seem to be efficient with the different processes observed, etc. You will also want to meet and “interview” the account manager that will be handling your business. Document your observations for yet another set of comparison items to review after all of the visits are completed to narrow the final decision-making process.
Following these steps will provide consistency in the evaluation process and aid in your decision regarding the best order fulfillment services provider you can find for your business at a cost that you can afford. We work with all different sized businesses that are looking to evaluate 3PL vendors as either a primary fulfillment house, or as a second warehouse location.
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