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June, 13 2022
If you're looking to switch your third-party logistics (3PL) provider, then you already recognize a straightforward fact: No two 3PL logistics companies are the same. Of course, by now, you know a lot about what to expect in terms of processes and costs when outsourcing your retail order fulfillment operations.
At some point, you might come to a realization that your current 3PL provider can’t meet your business needs anymore. You’re getting frustrated and can no longer cope with certain roadblocks that impede your business’ growth, so you’ve decided to find another 3PL company.
While bringing a new 3PL company onboard might be the next logical move, changing your provider is no walk in the park. There’s a lot to consider and you have to look into the possible benefits and downsides that come with switching to a new fulfillment provider.
Here’s what we’ll discuss in this piece:
How do you know when it’s time to make the move? We’ll highlight 5 crucial signs that can help you reach a decision. If you spot these 5 red flags, then you need to set the ball rolling to find a new 3PL partner and complete that switch as soon as possible.
The Supply chain and fulfillment will not always be perfect, so it’s normal to expect some mistakes. But you don’t want a third-party logistics provider that messes things up non-stop. If they are sending orders to the wrong addresses, shipping damaged products or getting things mixed up frequently, then you need a new 3PL.
Along with fulfilling orders, client and customer support is crucial. A good 3PL should be able to take care of related operations like returns, refunds, customer care, and support on the customer side. You’ll also need one that can handle inventory emergencies and provide support when needed. If your current 3PL doesn’t match up to those needs, then find a better provider.
We can’t overemphasize the value of a robust order management system. That’s how you track and monitor how orders are received, processed, and fulfilled. But that's not all because you want a 3PL whose system you can integrate with your software seamlessly. That makes it easy to create packing slips, shipping labels, custom packaging, and automatically upload orders.
If your customers are always complaining due to consistently bad delivery experiences, then your 3PL is doing your brand reputation more harm than good. You don't want customers sending in bad reviews on your website or via word-of-mouth. But if that’s the case, it’s time to look elsewhere
This has less to do with how cheap the company's services are but more about getting what you are paying for. Of course, you want top-quality fulfillment services, so if the 3PL isn't delivering on its promise with regards to customer experience, seamless tech, and readily available support, it’s time to find a new partner.
Moving from one 3PL to another is quite a demanding task, so it’s important to do it right by doing your due diligence. If you've done your homework already, your research will have revealed a couple of 3PL companies that look attractive. To help ensure that you not only pick the right one for your eCommerce business but also transition smoothly, here’s what to do:
You probably have an existing contract with your former logistics provider. If you are almost at the end of the contract, then switching should be easy. But if there are a couple of months left until it expires, you need to look at your options and decide how to get the contract canceled. Your contract will detail the specific criteria and set of conditions under which both parties can sever the agreement. At this point, it’s best to get a lawyer to help you get through the termination process.
While trying to onboard a new 3PL, asking relevant questions will help in your decision-making. Various third-party logistics providers bring different service promises, so be clear and upfront about what you envision and hope to benefit from the partnership. When negotiating the contract, you want to be direct about things like:
This is one of the most crucial aspects of changing a 3PL provider. Retailers want to know what to expect with regard to dear inventory and everyday order fulfillment while making the switch. That's because, if you don't get it right, your customers' experience within that period will suffer, ultimately putting your brand in a bad light. So ensure that your new fulfillment company has a robust strategy and plan to make the transition smoothly without disrupting your supply chain.
At this stage, it’s time to get in touch with all your supply chain partners. Making a move to the facilities of your new 3PL requires that you get your products and supplies to the new location as well. That's why your suppliers have to be kept in the loop to update your addresses. Doing so ensures that your new 3PL doesn’t run out of inventory. You’ll also get started with integrating with the new inventory management software to allow your new logistics provider to start reacting to customer orders at once.
A competent 3PL may have a seamless and frictionless transition process but that doesn’t mean there won’t be any hiccups. It’s best to keep your customers in the know about your new plans and help them understand the reason why you have to switch 3PLs. Stay transparent and honest with them so you’ll earn their trust and loyalty. After all, everything you’re doing is meant to bring them better services.
Completing a smooth transition doesn’t signify the end of your switch to a new 3PL. Make sure to track your new 3PL based on key metrics like inventory-level accuracy, shipping accuracy, on-time shipping percentages, shipping revenue, etc.
These KPIs are vital to your operations because a lagging order fulfillment process will see you lose so much in conversions and topline revenue. Using the right performance indicators to monitor your 3PL will ensure that you’re keeping your customers satisfied.
Getting it right with tracking your 3PL can see you turn shipping and delivery from a cost center to a profit center. Your logistics provider has multiple warehouses and distribution centers in different locations. With our Delivery Operating System at Fenix, you can plug in all distribution centers and then use our AI to start providing multiple delivery options, including BOPIS to customers. That way, you can start shipping faster, cheaper, and on time.
Author: Akhilesh Srivastava
Founder and CEO of FenixCommerce
