How to Evaluate 3PL Performance

So, you've decided to partner with a third-party logistics provider. Compared to trying to juggle 100% of fulfillment duties in-house, you've most likely seen several KPI improvements since contracting outside help. However, do you have a methodology in place to more objectively evaluate your 3PL's performance – and make a case for either renewing that partnership or seeking out a new one? Although every ecommerce business has different goals and priorities, you can use these broad considerations to help determine whether the terms of your current 3PL partnership should be reevaluated:

Size

If your company has grown significantly, it may have reached the point where in-house fulfillment management is finally viable. Or perhaps you may find that your current provider lacks the flexible space and staffing required to handle fluctuations in sales volume or product offerings.

Capabilities

For many e-tailers, fulfillment has become quite complex. You might decide to seek out a new 3PL in order to access strategically located distribution centers, better warehouse technology, or new customization capabilities to improve your fulfillment operations.

Costs

If warehouse space, labor, and/or shipping costs are having a disproportionate impact on your bottom line, it may be time to find a 3PL that can reduce your overhead in some or all of these areas.

Customer satisfaction

Ensuring a positive experience for the customer should be your 3PL’s top priority. Inventory issues, inaccurate orders, and delivery delays are signals that you need a 3PL that does a better job of adhering to your expectations for customer service.

In-House Expansion vs. 3PL Services

As your ecommerce business grows, the pressure increases to obtain more SKUs, staff, and facility upgrades. There are two paths you can take to invest in your growth: in-house managed expansion, or outsourced expansion through a third-party logistics provider (3PL).

Generally, your available resources, immediate needs, and planned rate of growth all factor in to deciding which path offers the better ROI. Since each strategy has its pros and cons, choosing between the two can be harder than it sounds. To help you decide which expansion path is best for your business and long-term strategy, you should consider the following areas.

Packaging & kitting considerations

Do your orders require simple packaging that can be prepared inexpensively in bulk quantities, or do they demand a more complex packaging procedure? If an intricate package is part of your product’s appeal or branding strategy, it may be worth keeping production in-house to maintain close control over the process and/or avoid transitional hiccups. But, if you have no such customization concerns, a 3PL may be a more cost-effective option. Although, depending on your customization needs and the 3PL’s capabilities, outsourcing may still be a good choice. For example, at Fulfillment Works, we have lots of resources to design and produce custom packaging for our clients at minimal cost.

Human capital considerations

3PL providers usually have all the resources needed to help clients start expanding right away. If you have a small staff or your executive team lacks the experience or availability to execute on growth initiatives in a timely manner, outsourcing is typically the better path for expansion.

Technology & equipment considerations

Upgrading to a new WMS or adding new equipment to distribution facility requires a sufficient budget and an integration strategy that minimizes operational disruption. The more complicated your expansion needs are, the more difficult they will be to accomplish entirely in-house. Since 3PL providers already have the technology and equipment in place, they may be the better choice for businesses that need rapid expansion of facilities or operational capabilities.  

3 Signs it's time for a 3PL Partnership

At some point, every ecommerce business asks itself, "is it time to partner with a 3PL provider?" The answer depends on several variables such as your long-term business goals, availability of internal resources, and your level of operational efficiency. Every business has different needs and priorities, so 3PL partnerships aren't the best answer for everyone. However, if you find yourself dealing with any of the following challenges on a regular basis, it may be time to bring in a 3PL provider.

Growth

Third-party logistics and fulfillment providers are among the best strategic options for helping ecommerce retailers (especially new ones) efficiently set the stage for rapid growth and/or improvement of services. Since 3PL providers already have robust distribution networks established, they can often help clients ship products to more customers, faster and at reduced cost.

Capital Investment

In some cases, partnering with a 3PL provider is a better alternative than investing in new facilities or technology. For example, upgrading to a new order processing system or adding new equipment to an already-full warehouse may require enormous amounts of time and capital to implement properly. However, 3PLs have already gone through those processes – and fine-tuned the results to accommodate the needs and demands of their clients.   

Operational Capacity

Order fulfillment is a complex and demanding aspect of ecommerce. If you find yourself already stretched thin with marketing, merchandizing, customer service, and other initiatives that are critical to the success of your business, outsourcing to a 3PL provider can help you keep your focus on those areas rather than managing fulfillment.

The Benefits of Call Center Outsourcing

Customer service call centers provide ecommerce businesses with a number of benefits. You need a call center – no question. However, you may not need to manage call center services internally. While an internal call center comes with some nice advantages in terms of flexibility and control, a partnership with a qualified provider also has perks that might be a better fit. In this post, we'll discuss a few of the benefits you can get through call center outsourcing. 

Cost savings

For many small to midsize companies, staffing and managing an internal call center can be challenging and costly. Unless you're selling highly technical products that require in-depth knowledge, the operational expenses may not be worthwhile. Conversely, an outsourced call center helps you avoid the costs of capital investments such as quality call monitoring systems, scheduling software, chat support integration with your website, etc. You can also save on the costs associated with recruiting, training and retaining call representatives – which really comes in handy during your peak season. Speaking of which…

Seasonal flexibility    

Because of their established focus on providing customer service, a good call center should be able to handle the higher volume of calls during your peak seasons without straining your budget or internal team.

Faster growth

If an outside partner is handling your call center functions, you're free to focus on the core components of your business. Outsourcing your call center allows you dedicate more bandwidth to developing products, customer acquisition, marketing campaigns and other growth initiatives.

Choosing whether to manage a call center on your own or outsource will ultimately depend on the nuances of your business. However, it's worth considering the cost-effective benefits of collaborating with call center service providers. To learn more about the call center services provided through Fulfillment Works, contact us today.

Tips for Choosing Fulfillment Software that's Omnichannel-Friendly

Most omnichannel retailers take an ad hoc approach to selecting fulfillment management software; opting for solutions designed to suit the needs of each sales channel. For example, you may utilize POS software for brick-and-mortar locations and an ecommerce platform (such as Shopify or Magento) for your ecommerce site.
    
Ideally, a 3PL provider should have no problem integrating your current technology and software solutions to keep everything working seamlessly. But if your expansion into omnichannel is recent, you may not know what features you need or which vendor to go with. In this post, we'll go over some tips for selecting fulfillment operations software and providers that will enable you to give your customers the best possible experience – no matter which channel they purchase through.
    

Brick-and-mortar Point-of-Sale Systems

There are many inventory management features you should look for in a POS. From an omnichannel perspective, it's critical to have real-time product availability from all store locations, and the ability to receive orders from your other sales channels (like your ecommerce site). This level of inventory oversight confers numerous advantages: store personnel can see inventory status across the chain, customers can buy online and pick up in store, and overall product availability is much clearer.

Ecommerce Platforms

Shoppers rely on various types of product information in their purchasing decisions. Therefore, you need an ecommerce platform that allows you to easily manage lots of merchandizing attributes like photos, product features, etc. The goal is to have detailed, searchable product information on your ecommerce site so customers can comfortably "add to cart" without needing to leave your site and find the information elsewhere – possibly from a competitor.

Choosing a vendor

Ideally, you'll want a software vendor that specializes in working with omnichannel clients. In addition to providing robust support for omnichannel processes (such as inventory synchronization), an important thing to look for is a commitment to building software with free and open APIs that allow your sales channels to share data and work together. At Fulfillment Works, our fulfillment management system has a fully-supported, real-time SOAP XML API that allows a client's programming team to write their own code for custom features and functionality.