In assisting multichannel companies with deciding on whether to use third party warehousing, third party logistics (3PL) or contact center solutions, we have found that many companies have been able to grow their businesses profitably by outsourcing. Our blog post, 10 Ways Companies Can Profit from Ecommerce Fulfillment Services, shows how many of our clients use third party warehousing advantageously.Read More >
Getting the most from your third party logistics (3PL) provider this peak season starts with your forecasting accuracy. In order for you to get the most from 3PL solutions, you need to have established measurable service levels that are agreed to by both parties as part of your agreement. Establishing these service levels, and having the 3PL vendor meet them requires that you supply realistic forecasts for calls and order volumes by day, by week a month in advance so that the vendor can plan staffing accordingly.Read More >
- You’re a start-up company with limited financial resources; or a company where fulfillment is not a core competency, but you have the need to upgrade your infrastructure (website, order management system, call center and or fulfillment operations) means an increase in expenses or requires new capital.
- You have seasonal spikes that run 10:1 or higher (peak vs. average sales week) and wish you could service these peaks in another way.
- You’re trying to build your business, and know fulfillment and customer service are critical to getting and growing sales—but fulfillment is not your core competency.
- Internal fulfillment costs continue to increase, impacting the bottom line.
In all of these situations,third party logistics might be the answer.Read More >
As companies grow and expand, ecommerce fulfillment services is an option that more of our clients are evaluating. This is a case study of how one client made its decision to implement and ecommerce fulfillment solution rather than manage their own operation. It is a small apparel company with 125,000 orders with 50%+ ecommerce orders. Product offering is 24,000 active SKUs and 75,000 calls annually. They needed to replace an outdated, ineffective, non-PCI/DSS compliant order management system, and they had no space for expansion. “People were sitting on top of each other” and the company had a huge assortment of core product to offer.
I fully understand and mostly agree that many multichannel companies want to control and provide internal fulfillment to their customers. However, I am increasingly impressed with the way companies are objectively evaluating how to use third party logistics (3PL) vendors to serve their fulfillment needs.
Getting the best service from your third party logistics (3PL) provider this holiday season starts with your volume forecasting accuracy. You need to have established measureable service levels that are agreed to by both parties, as part of your contract. Establishing these service levels and having the 3PL vendor meet them requires that you supply realistic volume forecasts for the call center (orders, calls, emails, mail, etc.) and the warehouse (orders, receipts, returns, etc.) by day and by week a month in advance so that the 3PL vendor can plan their labor accordingly.
Many multichannel merchants focus on how they can lower operating costs of their supply chain logistics when they consider outsourcing certain tasks. When you use third party fulfillment partners to outsource your operations, you also outsource the investment. Sounds obvious, but the magnitude isn't always clear until you're faced with replacing an order management system, moving into a new fulfillment space or upgrading your website and platform.Read More >
We all know we’re coming out of a tough business climate. With many companies ramping up for fall and holiday seasons, there is an urgent need to increase productivity and reduce costs without having to make major capital purchases to do so. Here are some supply chain strategies to reduce your cost per order, increase capacity without expansion, and improve service levels in your supply chain logistics. The source of this information is experience gained in our supply chain consulting work with multichannel companies, as well as from the Supply Chain Summit.
Perform an Operational Audit
A warehouse assessment is a great starting point. Warehouse assessments will identify your needs, and help recognize potential improvements to process, layout and use of space, staff productivity, warehouse management system (and peripheral systems) and freight analysis. The objectives are to lower the cost per order, increase storage capacity within the existing center, reduce inbound and outbound freight costs, and improve service levels and turnaround times.
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.