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Have You Outgrown Your 3PL?

June 17, 2020 Published by

visualization of growth

When businesses first start, they quickly find out that fulfilling orders can be a tricky, costly process. As such, they often turn to third-party logistics companies (3PLs) that can handle all the aspects of order fulfillment they may not be capable of. This kind of partnership can prove beneficial for both parties. But in order for it to work long term, the 3PL must evolve to keep pace with the business’s growth. Without continual development, a 3PL may eventually find their client’s needs now exceed what they can provide.

Here are the top, tell-tale signs that you’ve outgrown your 3PL.

#1: Your 3PL Can’t Fulfill Your Order Volume

The first sign you’ve outgrown your 3PL is that they cannot fulfill the amount of orders requested of your business. As a result, you will likely oversell products. This will lead to items that are “out of stock” on your website, which will negatively impact sales and create a bad reputation for your brand. Poor inventory management will ruin your business plans, decreasing your business’s efficiency and productivity. However, choose the right 3PL and you’ll find out outsourcing inventory management can prove very beneficial.

Your 3PL not being able to fulfill orders will also be a major problem if you want to expand. Expect to not have enough support to ship orders out internationally or grow your inventory variety if your 3PL does not rise up to the challenge.

#2: Your 3PL Shipping and Fulfillment Costs Are Rising

Cost is one of the major reasons you should consider switching to another 3PL provider. Your 3PL should be continuously working with freight carriers, striving to pass along better rates to you. Constant fluctuations in price could indicate that your 3PL is making poor financial decisions and wants you to foot the bill. Their operational costs including warehouse space, labor and technology could also be affecting your bottom line.

If you think your 3PL is unfairly hiking prices, it is in your best interest to explore alternatives. Other 3PLs may offer more competitive rates, so if you are not in agreement with your current 3PL costs, start looking around for a better deal.

#3: Customers Are Experiencing Service Failures

This is a big one. Customers expect their packages to arrive on time and want tracking updates for their orders. If any delivery delays occur, this can cause a negative customer experience, which will cause your customers to lose trust in your brand. According to a study by Voxware, 69 percent of consumers are less likely to shop with a retailer in the future if the item they purchased is not delivered within two days of the date promised. Being that it’s far more costly to acquire a new customer than to retain one, this can have a very detrimental effect on your business.

It’s also important that your 3PL provides inventory and fulfillment information including order updates, shipment tracking information and inventory availability. When your 3PL fails to provide information, your business departments will suffer as they do not have the data necessary to make sound business decisions.

#4: Your 3PL Provider Is Unable To Learn

In any business, a certain degree of trial and error exist. An important part of growing as a business is learning from mistakes and building upon the solutions we find. However, if your 3PL makes the same mistakes over and over again, this can be a red flag indicating poor management and an inability to learn important lessons.

If you find that your 3PL is losing more clients than they are taking on, their leadership is a revolving door, or that they are slow to adapt new technology and strategies, those are bad signs. You’d be wise to switch out your 3PL at this point to avoid any of their problems spilling over into your business.

See the Signs? Make the Change

If your 3PL is exhibiting any of the signs mentioned above, it’s important to start looking for alternatives. The fulfillment process is extremely important in this age of fast deliveries and high customer expectations. Invest in a 3PL that can scale with your business and create a positive brand image for you.