27 Point Checklist for Third-Party Logistics (3PL) Contracts

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. 

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10 Considerations for Transitioning from a 3PL to Internal Fulfillment

Companies that utilize third party fulfillment (3PL) services sometimes reach a point where they consider transitioning from the 3PL services to internal warehousing and order fulfillment. Some of what drives these decisions is to control costs, whereas others have had a bad experience with 3PLs and now only trust themselves with their product. Using a 3PL isn’t for every company.

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How to Control Rate Increases in 3PL Contracts

Reviewing contracts for third party logistic (3PL) providers can be a daunting task – especially for those not familiar with the process.  One of the most critical aspects in any 3PL contract is the language surrounding pricing and rate increases.  It is vital to ensure that the language is fair for both the customer, as well as the 3PL.   

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How To Analyze If Third Party Fulfillment Is Right For Your e-Commerce Company

There are hundreds of competent third part fulfillment (3PL) facilities in operation today. Many have multiple facilities, which allows clients to be closer to the customer and save shipping costs. Additionally, private equity investors have acquired many major 3PL companies and consolidated them into 3PLs with dozens to hundreds of facilities. Many of these have specialized fulfillment for channels like DirectTV (DTV).

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Third Party Warehousing - How to Get the Most Out of Your Relationship

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. 

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Using 3PL Solutions for a Successful Peak Season

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.

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Is Third Party Warehousing (3PL) Right for My Company?

Problems:

  • 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.

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Ecommerce Fulfillment: How One Client Evaluated Options

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.

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How Our Clients Use 3rd Party Warehousing

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.  

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Get the Best Holiday Service from your Third Party Logistics Provider

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 measurable 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.

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