Guide to Managing 3PL Partnerships

Guide to Managing 3PL Partnerships

The success of any eCommerce business heavily relies on its logistics and supply chain. As you are expanding your business to the newer markets and customer base it becomes crucial to outsource the fulfillment to a reliable third party logistics (3PL) fulfillment company. 3PLs handle your order fulfillment services, including warehousing and storage, kitting, picking and packing, shipping, and even returns.

Benefits of Partnering with a 3PL Provider

3PL companies are experts in logistics and fulfillment. Outsourcing fulfillment to them enables you to focus on more crucial parts of the business like production, marketing, and launch of your product. It provides you the scalability as your business expands with less upfront and infrastructure costs. It saves time, effort, and costs that you otherwise have to spend on building warehouse, transportation, and delivery systems. You can also leverage the expansion in the new markets and customer base with a reliable global supply chain partner.

With so many benefits, it is equally important to choose your 3PL partner carefully because your 3PL service provider can directly affect your customer satisfaction.

Mistakes to Avoid While Choosing a 3PL Company

Not Setting Clear Expectations

While choosing a 3PL partner, it is very important to be absolutely transparent and set clear expectations. There are a number of metrics involved in the successful fulfillment of an eCommerce order. Make sure to communicate the expected number of orders, returns, and inventory details before signing a contract. Determine the volume of the deliveries while taking into consideration the seasonality factor affecting your orders, and make sure to set clear responsibilities for any issues or logistical errors. Keep monitoring these metrics over time and revise your contract if needed. Make sure to provide clear instructions on the packaging details and quality.

Not Doing Your Research

Partnering with a third-party logistics company is a long haul. Do your homework before agreeing to any terms or signing a contract. Make sure to carry out extensive research about their experience, client’s case studies, partnerships & relationships with FedEx, UPS, etc.

Going for a Lower Upfront Cost

Be careful while going through the rates and upfront costs of the 3PL services. The lower upfront cost can be tempting but it shouldn’t be the determining factor while deciding your 3PL partner. Make sure to check their technology stack, quality control standards, and networking, reach, and customer services before making your decision. Choosing a low variable rate or lower upfront cost can be more expensive in the long run.

Choosing a 3PL Warehouse Closer to Your Location

Choosing a 3PL closer to your own location might sound convenient but you should opt for a location that is more convenient for your customer base. A 3PL company with a nationwide reach and global network can help make the deliveries to your customer faster. Instead of looking for 3PL companies near me, focus on a 3PL company with a better network and reach.

Lack of Communication

Don’t assume anything. Mention each nitty-gritty in writing in the form of standard operating procedures (SOPs) before making a contract. Communicate how your business operates, your goals, and expectations from your fulfillment partner.

Not Treating Your 3PL as a Partner

Treat your 3PL provider as a growing partnership rather than a one-time transaction. Continuous communication and trusting them can make this partnership last longer and strengthen your connections. If you have any issues or questions, don’t hesitate to ask and strive for shared success. You should consider everything before signing a contract or a master service agreement (MSA), but once you have signed, support each other to ensure your business runs smoothly.

Not Trusting Your Partner

Expecting perfection from day one isn’t a realistic approach. Trust your partner because you hired them for a reason and they took you on for a reason. Micromanagement can be a waste of time for you and your partner, however, you should take full responsibility for facilitating the outsourcing process.

Continuous Improvement

Keep into consideration the future growth of your company while choosing a 3PL logistic provider. As your business grows, your key metrics also change, so keep on providing the latest and relevant information to your third-party logistics company to ensure a smooth business operation.

Factors to Consider When Choosing a 3PL Logistics Partner

The first things to consider while choosing a 3PL partner are the costs, your budget, and your own business’ needs. You should also consider their capabilities, experience, customer service, technology infrastructure, scalability, safety protocols, customization, location, and networking when selecting a third-party logistics company.

The Bottom Line

3PL companies have more expertise in logistics and an extensive delivery network than your own business supply chain capabilities. Partnering up with a 3PL company such as ShipBots can save you the huge cost in infrastructure development, warehousing, staffing, and technology stack investments. It also gives you time to focus on your core competencies to improve your own product and services. With the right 3PL logistic partner you can grow and expand into newer markets and customer bases faster. One of the key benefits is the higher customer satisfaction rate and retention through improved services and timely delivery.

Choosing the right 3PL partner doesn’t have to be difficult if you do your proper research and avoid making the above-mentioned mistakes. Get in touch with a ShipBots fulfillment expert to see how a partnership could benefit your business.

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