Switching logistics providers may seem like a huge daunting task. It certainly requires a lot of due diligence and upfront administrative effort, but it can be incredibly valuable to your business in the long run. You want to find a 3PL you can trust to fulfill your products perfectly, who understands that your main objective is to give your customers the best experience possible, no matter what it takes.
Here’s a checklist to consider before making the switch.
Top Reasons Your 3PL Isn’t a Good Fit
While there are many reasons to switch 3PLs, the most common is service issues. If you notice wrong orders, or items that go missing completely, there’s likely an deeper operational issue. The tip off for this is if your customers are unhappy with timing and order accuracy.
Secondarily, you might consider switching providers if your current 3PL can’t keep up with your company’s growth. A strong 3PL should be measuring and tracking KPIs with you, and following up to help optimize your strategies. These KPIs should be at your fingertips and the 3PL should be able to validate the accuracy of the data and how they collected it. For example, you should be able to view in real-time or request a report from your 3PL as it relates to performance around on-time shipping. If your 3PL isn’t providing enough support for new sales channels and higher order volume, it may be time to look around for a better fit.
Perhaps your current 3PL doesn’t have services that match your specific needs. This may be the case if you’ve had to pivot during COVID, or have added products that your provider can’t fulfill easily. Many 3PLs offer simple solutions for getting products to customers. If you are a growing company, adding SKUs, updating your product, you may have outgrown the capabilities of your 3PL.
A Checklist to Consider Before You Switch 3PLs
Review Your Contract
First thing’s first, you should check your contract to see if it’s time for renewal and if there are any penalties for an early exit. If you are experiencing major service issues or order issues, any extra fees you might have to pay in order to break your contract might be worth it. Work backwards from your agreed upon notice to ensure your transition, if you choose to move, do so during your non-peak season to reduce any customer service disruption.
Know Your Target Audience
Where are the bulk of your sales going, and where do you want to expand in the next five or ten years? Each 3PL will have a different fulfillment strategy and location. Some have more points of distribution than others. Because you will be switching to new fulfillment centers, it’s important to know where your end-customers are to see how that switch will affect your shipping costs and delivery times. Working with a 3PL with a distributed network of fulfillment centers is going to give you more coverage and get to customers faster.
Review Your Goals
What are your topline business goals? This will inform what kind of growth you’ll be looking at in the next few years, and what kind of support you need. Are you planning to launch new products? Grow your customer base to international markets? If you can articulate these to prospective 3PLs, they will immediately be able to tell you what they can do for you. The clearer you are on your goals, the better a 3PL can help support you in achieving them.
Take Stock of Inventory
Moving your products to a new fulfillment center is likely going to be the most complex part of switching 3PLs. The new 3PL you’re working with should be able to take the reins and help you strategize the best timing and workflow for that. But it starts with you knowing exactly what you have in stock. Doing a full inventory count will help the new 3PL execute more efficiently.
“When looking for a 3PL, dig deep into the details. EDI integration is a perfect example. Because our last logistics partner had a third-party EDI provider we had a lot of manual tasks. We had to download all the labels, to make PDFs of them, and send them to our logistics provider. With DCL everything is just a few clicks and we’re good to go.”
Understand Your Service Resources
While you might think about your business every waking minute, some 3PL partners may not be able to match your passion. It’s important to understand how your 3PL partner is structured in regards to supporting your business, including client service and operations support. In the event of an emergency, who do I call? What’s the expected turnaround time for responses? Where is my account manager located?
Get Clear On Your Growth Strategy
Want to see your product on the shelves of a particular retail store? Are there online marketplaces or international markets that you think are a great fit for your brand? If your five-year growth strategy includes any specifics, you’ll want to vet that against a prospective 3PL. It’s important to choose a 3PL with core competencies or reliable network connections in the sales channels that are directly in line with your growth strategy.
Do It For Your Customers
There are plenty of providers who can put products in a box and ship them—but not all 3PLs are alike, and some may have more to offer when it comes to value added services than others. Does your product need assembling? Are there seasonal additions you want to ensure are part of your packaging? These extras are ultimately beneficial to keep your customer engaged and coming back for more. Find a 3PL who cares as much as you do about the unboxing experience your customers are getting. If you want anything outside the generic pick, pack, and ship, you’ll need to make sure your prospective 3PL provides the right value added services.
Looking for a new 3PL sounds like a daunting task, until you realize the potential that you may be missing by staying with a provider who doesn’t match the needs of your growing business. Finding the right fit in any logistics partner is key—it will not only help your run a more efficient supply chain, but it will aid in your company’s growth over time.