Whether you are a small startup looking to outsource fulfillment for the first time, or a growing ecommerce business wanting to switch 3PLs, there are many variables to consider when vetting a fulfillment service provider.
Not all 3PLs (third-party logistics) offer the same services or level of support—a provider that matches your needs is the right fit for you brand and getting that can make or break your success as a company.
We’ve put together a full list of questions to take to your prospective fulfillment partner when vetting if they can support your company in the ways you need.
When is the Right Time to Switch 3PLs?
If you are noticing errors in your fulfillment flow—like customer complaints about missed or incorrect products being sent—it’s probably time to start looking for a new fulfillment provider. Secondarily, if your 3PL is always behind on order processing—for example, if you’re growing and they just can’t seem to keep up—that’s another sign it might be time to switch.
Finding a 3PL who can match your company needs requires rigorous work. Not only do you need to dig into your order and customer data to figure out what support you need immediately, you should also take into account your roadmap and future plans. Knowing which services you might need in a few years will help you choose a fulfillment provider who you can grow with—it’s no easy feat to integrate with a new provider, so you’ll want to stick with a 3PL for many years.
How to Compare 3PLs
When seeking a new fulfillment provider, don’t be afraid to select a few and compare quotes.
Don’t focus just on the price. Yes, you need to make sure the cost of outsourcing fulfillment fits in your budget, but cost shouldn’t be the only factor. It’s really important to tour their facilities and spend time with their teams. Your potential 3PL’s facilities, operations, and customer service are all really important aspects of your partnership. Ask hard questions about what they can provide your business.
Get a 360-degree view of your new potential partner by asking to speak with clients of theirs. Bonus points if their clients have similar products or business goals as you. Tread lightly if you catch any warning signs in your evaluation process.
The Comprehensive 3PL Services Questionnaire
General Operations & Pricing
Most brands will focus on costs, and rightly so. When you start paying to outsource order fulfillment, a very important aspect of your business, you want to make sure you are getting your money’s worth. But when vetting a new 3PL partner, make sure their operations are running smoothly and are optimized for growth.
- What products do you specialize in?
- What’s your minimum monthly order volume? Are there charges if we don’t meet that number?
- What type of contracts are required?
- What is your service level agreement (SLA)?
- What is your on-time shipping performance? Do you have an order accuracy performance guarantee?
- Do you offer same-day order processing?
- How long does integration usually take?
- What is the full cost breakdown of your service fees?
- What’s not included in the initial cost quote?
Facilities & Quality Assurance
Location is huge when vetting a fulfillment provider. It will affect your overall shipping costs. If you think you’ll need to be in person with your inventory often, make sure you choose a 3PL company that’s easy for you to get to. And don’t be shy about asking hard questions relating to quality and regulations. A 3PL who pays attention to quality standards will be eager to share reports, awards, and the latest areas of improvement with you.
- Do you have any certifications, or awards? Do your due diligence to look up the certifications you may want to hear about, such as ISO 9001 or HIPPA compliance.
- What are the most recent upgrades you’ve done to your facilities?
- What type(s) of operational automation do you employ, if any?
- What are your normal business operating days/hours? Are there options to extend those for special projects?
- How are you working toward more sustainable practices in your operations?
- What errors have you handled in the past? What does a corrective action plan look like?
- Where are your facilities located? Do you offer distributed inventory?
- What type of security do your facilities employ? What IT infrastructure do you have for data security?
Technology & Automation
In the last few years ecommerce has skyrocketed. It is now imperative for fulfillment providers to have fast, reliable, and well-connected tools. Get a demo of your 3PL’s order management system, their WMS, their conveyance and automation systems. Ask how they stay relevant and what competitive advantages they offer their customers through tools and technology.
- Do you provide regular inventory cycle counts? In what format?
- What type of technology suite do you use for inventory management?
- What is the warehouse management system you use? Can we see a demo?
- Do you have an open API? What integrations do you work with natively?
- Verify if they integrate with the checkout software, financial tools, and ERP you already work with.
- What partnerships, integrations, and API support do you provide?
Shipping & Transportation
Transportation is usually the biggest cost for an ecommerce company. You want a 3PL who has great relationships with shipping carriers, freight forwarders, and international experts. A provider who can help you optimize your costs and get you discounts on bulk shipping volume will help save you money in the long run. Plus, if your customers get their products on time, every time, you’ll have loyal customers who keep coming back for more.
- Who are your shipping partners? Make sure that you are looking at 3PLs with comparable networks in the area that applies to you.
- How do you handle freight and postage fees?
- Do you handle returns? If so, how do you track process for tracking? Do you help with refurbishment and/or disposal?
- What percentage of shipments arrive on time and in full?
- What percentage of my orders will reach customers in two days or less?
- Do you fulfill international orders?
- What international shipping partners do you work with?
Overall Service & Scalability
You can’t have a service provider without the service. Chances are you’ll need more than just the basic pick, pack and ship services, so be sure you get a comprehensive look at what else your 3PL can provide. Get time with their client service team, as those are the people you’ll be communicating with regularly.
- Do you provide value-added services such as kitting or custom projects? If so, what are some examples of what other brands are doing?
- What’s the structure of your support team?
- Will the same person be working on my business? If not, how do I ensure the person I’m speaking with understands my business and how to support me.
- What is the chain of events if an issue arises? What would escalation look like?
- What’s your average customer response time?
- Is my fulfillment process handled by your employees, outsourced, or a combination of both?
- What is the average turnaround time for completion of documentation?
- How have other brands scaled with you?
- How easily is it to expand inventory within your warehouse? Is there flexibility to reduce product shelf space if my order volume decreases?
- What are the KPIs you help your customers track?
- What type of reporting can we expect from you? How often?
If you’re looking for a 3PL with fulfillment centers in cities across the US, we own and operate facilities in The Bay Area, Los Angeles, and Kentucky. Use DCL’s national footprint of warehouses to distribute your inventory across the country to reduce transit times and save on shipping costs. If you need fulfillment or shipping support and want to partner with DCL Logistics, we’d love to hear from you.