How to Rate Your 3PL

The management and fulfillment of your product is arguably one of the most critical roles within your supply chain. There’s a direct correlation between the quality and speed of the fulfillment process and your customers’ satisfaction (no matter if you are shipping DTC, to retailers, or internationally). The accuracy of the order, how the order is packaged and presented, and the transit times are often taken for granted by the buyer, but sellers know how difficult it is to get all of these things right at scale. 

Properly evaluating your current or potential fulfillment partner can be a tall task. Often price and deal terms are considered the most important aspect of the evaluation process. Relying only on those two aspects is short sighted and may leave you wanting a new 3PL all too soon. While cost and terms are important, your customer’s experience should be paramount when it comes to fulfillment. Here are four equally important things to consider, and weigh your 3PL against, whether you are doing an annual review or interviewing a prospective partner.  

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Service

Customer service should be at the top of your list in everything you do, every decision you make. Choosing a fulfillment partner is no different. Service is where things start and end in the overall experience with your fulfillment partner. 

Do you have a direct point of contact at your 3PL? An actual person you can call, who picks up the phone and knows your business? It seems like this would be a rhetorical question in any other industry, but in fulfillment it’s a legitimate question. As the idea of fulfillment-as-a-service (FaaS) becomes more commonplace, often the business production output comes at the expense of service.  

Many of these fulfillment companies tout they have hundreds and in some cases thousands of customers. On the surface, this is attractive for merchants because they believe the economies of scale will drive down fulfillment and shipping costs. However, most of these fulfillment companies consolidate their service centers or outsource them completely which moves the people servicing your business further and further away from your actual product. 

Service questions to consider:  

  • How well does you 3PL understand your business? 
  • How quickly do they react to requests and issues? 
  • What’s the customer-to-account-manager ratio? 
  • How proactively does your 3PL identify potential issues or cost savings opportunities? 
  • Are you able to connect with senior management and department leaders? 

Quality

99.99% fulfillment accuracy and on-time shipments! We’ve all seen it (and DCL touts it) as it’s the most used data point 3PLs use to market their services. It’s a powerful message and an industry standard benchmark. 

What is often overlooked is understanding the .01% when mistakes are made, or shipments do not leave on time. These issues drive most of the customer complaints and if not handled quickly and appropriately, can really tarnish a seller’s reputation. It is important to assess how your 3PL manages and governs the quality of the fulfillment process. How quickly your 3PL responds to mistakes and the process they have in place to understand the root cause is equally important to shipping out the orders correctly. Most 3PLs will have .01% errors, so you’ll have to deal with some customer complaints. But if your 3PL can’t get to the root cause of those, that error log will grow.  

Another factor that sellers need to weigh as it relates to fulfillment quality is operational experience and management. Experienced operators (from leadership to the workers on the floor) will make a world of difference in terms of order accuracy and fulfillment speed, especially as you grow or see sudden spikes in sales. Also, there is a growing trend in the industry where 3PLs outsource their fulfillment, in some cases unbeknownst to the seller, which can drive costs down but may be at the expense of quality and operational control.  

How to ask about your 3PL’s quality process: 

  • What is the process your 3PL takes to address quality issues? 
  • What level of detail does your 3PL provide when these issues are identified? 
  • Do they provide a root cause analysis? 
  • Does your 3PL have a separate quality team? 
  • What is the reporting structure of that quality team?  
  • Does your 3PL abide by specific operational philosophies or have any special certifications? 5S, ISO certification, etc. 
  • Is all your fulfillment being handled by your 3PL’s employees? 

Flexibility 

When you run an ecommerce company you realize how much of your time is solving edge case problems. DCL Logistics has four decades of experience in the business, and we understand what is required to meet those edge case issues. It is the seemingly small projects that create most headaches. Anyone can pick, pack, and ship an order, right? What really differentiates a 3PL is the ability to adapt to their customers’ businesses individually and adjust to the changes in the market.  

An example of having to adapt to unforeseen market changes was during the pandemic when Amazon abruptly stopped accepting DCL customers’ inventory as part of their Amazon FBA program. This resulted in customers having to quickly switch to Amazon FBM and pivoting DCL resources to provide the necessary technical and operational support. 

Is flexibility ingrained in your 3PLs business and culture? Much more than ever, merchants are getting real-time feedback from their customers and must adapt quickly to be successful. It requires partners up and down the supply chain, including their fulfillment partners, to have a similar mindset of flexibility. 

Since DCL was founded 40 years ago, we have always embraced a “startup” mentality. We work with a lot of companies that are trendsetters in their own respective verticals. A common theme among our customers is a pioneering spirit—nimble, innovative, and ready to change on a dime when necessary. Your 3PL should be able to adapt with you. 

How you know if your 3PL will meet your company needs: 

  • Does your 3PL offer you creative solutions as it relates to special projects? 
  • What sales channels does your 3PL support?
  • What services does your 3PL offer that you may not currently be using, but may in the future? Retail fulfillment and EDI support, kitting and assembly, postponement work, procurement of special materials, etc.? While you may not need any of these services immediately, it is important to understand these options to support your long-term growth. 

Technology

In our lightning-speed age of instant gratification, customers want real-time updates and on-demand package tracking, standardized two-day (or less!) shipping. This leaves sellers needing immediate analytics, data, and insights to fulfill their customers’ needs. As the ecommerce technology stack grows and becomes increasingly more sophisticated, the traditional and antiquated warehouse and transportation service model is not sufficient anymore. Modern 3PLs need to invest heavily in technology and evolve their process to stay ahead of the curve. 

Seller-facing tools, most notably a 3PLs Order Management System (OMS), play a critical role in managing their day-to-day business. A good 3PL OMS will provide sellers with visibility and control over their entire fulfillment process, including tracking orders, viewing inventory levels, and managing returns. The depth of data, analytics, and control that your 3PLs OMS provides can play a key role in a seller’s ability to adapt quickly and efficiently to their customer demands. 

It is also important to understand how a 3PL invests and deploys their technology resources within their company and operations. The primary objectives of a 3PL are to measure performance, drive operational efficiencies, and ensure a quality output (i.e., the right product gets sent to the right customer on time). Coupling a strong and experienced operations team with modern technology can help a 3PL meet their objectives, driving down costs and saving their customers’ money. Tech-forward 3PLs have flourished over the last few years with the rising labor costs and explosion in ecommerce growth. 

How is your 3PL investing in technology? 

  • How would you rate the tools and data your 3PLs OMS provides? 
  • Does your 3PL allow you to easily connect and manage multiple sales channels?  
  • Is your 3PL investing in automation in the warehouse? If so, how? 
  • How does your 3PL use technology to quickly scale to meet fulfillment demands? 

The 3PL landscape has grown exponentially over the last decade so it can be challenging to identify and evaluate the ones that will support your long-term growth. Navigating through all the marketing and sales jargon to get to the core of what the 3PL does well (and doesn’t) is critical and can be overwhelming. However, breaking down the evaluation to the core components that matter will make the process that much easier.  

 

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, Kentucky and the East Coast. 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.