In today’s increasingly competitive global economy, ecommerce companies are always looking for ways to reduce costs and increase efficiency. Many companies have turned to outsourcing to a third-party logistics (3PL) provider to handle their supply chain needs. 3PLs offer a range of services such as warehousing, order fulfillment, and transportation.
While these services can be of great benefit to a company, it is important to properly evaluate any 3PL that you are considering to ensure that the benefits outweigh the costs. Here are 10 things you should do when evaluating a 3PL provider, whether you want to switch fulfillment providers, or not.
Review Service Level Agreements
The first step in evaluating a 3PL provider is to review the service level agreements (SLAs). SLAs are legally binding contracts between the 3PL and their client that outline the services that will be provided and the associated costs. By reviewing the SLAs, you can get an idea of how well the 3PL is performing and whether they are meeting the agreed-upon service levels.
Compare Costs
The next step should be comparing their costs to those of an in-house operation. This will allow you to see if the 3PL’s services are cost-effective and if they are providing value for the money. Be sure to factor in any additional costs such as setup fees, technology fees, and transportation costs.
Analyze On-Time Delivery Rates
It’s important to measure the 3PL’s on-time delivery rates. This will give you an idea of how reliable the 3PL is and if they are meeting customer expectations. On-time delivery rates are especially important for companies that operate in industries where timeliness is critical.
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Track Inventory Accuracy
Another key metric to look for in a 3PL provider is inventory accuracy. This will give you an idea of how well the 3PL is managing your inventory and if they are able to keep track of the stock levels. It’s also important to measure the 3PL’s ability to keep track of inventory in transit, as this can be a major source of delays and errors.
Measure Order Fulfillment Speed
Order fulfillment speed is another important metric for measuring the ROI of a 3PL provider. This will give you an idea of how quickly the 3PL is able to process orders and get them out the door. This is especially important for companies that operate in industries where customer satisfaction is critical.
Calculate Cost Savings
Calculating the cost savings associated with using a 3PL provider can give you an indication if working with a 3PL provider is a good option for your business. This should include both the direct costs, such as warehousing and transportation, as well as the indirect costs, such as the cost of labor and technology. By calculating the cost savings, you can get a better idea of how the 3PL is helping your business save money.
Track Complaint Resolution Times
Looking at the complaint resolution times will give you an idea of how quickly the 3PL is able to resolve customer complaints and if they are able to resolve them in a satisfactory manner. This is important for companies that rely heavily on customer satisfaction.
Monitor Employee Productivity
Employee productivity is another great way to assess a potential 3PL provider. This should include the number of orders processed, the number of orders shipped, and the number of orders delivered on time. By monitoring employee productivity, you can get an idea of how efficiently the 3PL is operating.
Measure Customer Satisfaction
Customer satisfaction can be measured in a variety of ways, such as customer surveys, customer reviews, and customer feedback. By measuring customer satisfaction, you can get an idea of how well the 3PL is meeting customer expectations.
Track Revenue
Tracking revenue will give you an indication of how much additional revenue the 3PL is generating for your business. By comparing the revenue generated by the 3PL to the costs associated with using them, you can get a better idea of the overall ROI.
Bottom Line
Evaluating a 3PL provider is an important part of making the decision to partner with one, choose in-house fulfillment, or look to switch fulfillment partners. By following the steps outlined above, you can get a better idea of how well the 3PL is performing and if they are providing value for the money. With the right metrics in place, you can make an informed decision about whether or not to continue working with the 3PL provider.
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, The East Coast 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.
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