Your reputation rests on how your customers experience your product and service delivery. Whether you’re currently outsourcing your fulfillment or managing it in-house, evaluating its performance will give you a glimpse into how you’re doing from your customers’ perspective. With reviews now available online with the click of a button, even a few minor issues can taint your brand.
The other reason to look at your in-house fulfillment performance is that it can be the 5,000-pound gorilla in the room, taking up all the space in your workday and leaving nothing for marketing efforts, new ideas, and customer focus.
What’s So Great About 3PL?
Third-party logistics (3PL) is a fantastic way to leverage scarce resources in a startup Ecommerce business or extend resources in a mature industry. Why should you take the time, personnel, and resources to build a fulfillment organization when your profitability comes from new product ideas and marketing?
You can contract with a company specializing in fulfillment and move forward with innovation to advance your business, free of day-to-day logistics concerns. Here are a few things a great 3PL company can do for you:
- Inventory management
- Ecommerce order fulfillment and tracking
- Packaging, repackaging, and assembly
- Retail compliance and B2B fulfillment
- Transportation rate shopping
- Returns management
How Do You Know It’s Time for a Change?
Change is hard. It often takes time, money, and risk to move from an insufficient service you depend on daily to one with growth potential. But staying where you are with lackluster services keeps you limited to today’s business level. Taking the risk to move to a more effective provider can supercharge your business and open the gates to an even more prosperous future.
Here are a few things to look for:
1. You’re Getting More Complaints
What are your most frequent customer complaints? While negative comments may be hard to hear, they’re your best gauge for how you can improve and for any gaps in your fulfillmentservices. Once you know, you can find a provider that fills in the gaps.
2. You’re struggling to manage cost
Are your in-house fulfillment cost projections consistently missing the mark? Managing the rising cost of real estate and labor in today’s market is a challenge. This is the time to step back, take a close look, and evaluate other alternatives. 3PLs are not immune to these struggles, but their experience and resources allow for a variety of creative solutions. They can also take advantage of their scale, sharing space and labor between accounts to manage unexpected changes in demand.
3. Your 3PL is unresponsive
Are you getting the customer service you need from your 3PL provider? Are your calls going unanswered? Are you having inconsistent communication? Are problems not being resolved? Maybe customer complaints are mounting. Open, responsive communication is a critical factor in a 3PL partner. Your business has to be agile in this economic environment, and your 3PL provider has to keep in step.
4. Your technology is outdated
Have no doubt that your competitors are searching out the latest technology. They know that technology is changing at the speed of light, enabling enterprises to work faster and better. Having a powerful warehouse management system (WMS) is critical. If your 3PL partner uses outdated technology, you may fall behind.
Additionally, many of your customers likely use multiple Ecommerce shops to make purchases. A fulfillment provider should have the technology to work with multiple sales channels, communicate inventory needs with warehouses, and coordinate shipping routes with carriers to track packages.
5. You don’t have cyclical agility
Most businesses have times of high and low demand. Demand may escalate around the holidays, or maybe summer is when customers flock to your products. A 3PL partner must be able to flex with the ebbs and flows of your business.
6. You see too many mistakes
No one is perfect, but a fulfillment provider using the latest technology should be accurate a large percentage of the time. Continued errors without a plan to improve can erode your reputation, and with the immediacy of the internet, negative comments have damaged more than one business.
7. Your global distribution needs are unmet
Let’s face it; we operate in a global economy. The internet now connects all of us, and even if you’re not addressing international fulfillment, your competition probably is. Make sure your 3PL provider can grow worldwide with you.
8. No fulfillment scalability
Every company has different fulfillment requirements. Over time, these requirements may change. You may downsize your operations when you need fewer services, or your business may grow to where the supply chain requires added resources to keep pace with the demand.
A provider that cannot scale their fulfillment capabilities to anticipate future demand might struggle to get orders out on time or not have the inventory on hand to ship. The fulfillment provider you work with needs to understand how to scale order fulfillment services to keep up with fluctuating customer demands.
9. Pricing not up to par
When selecting a fulfillment provider, all service pricing should be clear throughout the business relationship. If price hikes do occur, your provider should communicate this with you clearly and concisely.
The fulfillment provider also needs to review their pricing structure to determine whether your company still needs the current level of service or if a different service package with lower pricing would be a better fit. If there are too many price hikes that happen without warning, you should be wary. Your customers may be unhappy if they see your product prices jumping around too frequently.
10. Cannot handle subservices
There are many subservices that a fulfillment provider may offer. They may provide special packaging and branding during sales promotions, assemble gift boxes, offer special labeling on certain products, or provide essential inventory management.
If a fulfillment center cannot handle your requests or has no way to take submitted requests, this could impact how you promote your products to end customers. Additionally, if your marketing strategies do not match your customer expectations, it could cause your clients to distrust your brand.
11. Not a one-stop provider
More businesses are looking for one-stop shops that can offer a wide array of services under one roof. Going to multiple fulfillment providers to gain a specific service is not cost-effective or efficient for your business. Finding a one-stop fulfillment provider allows you to have all the services bundled under one roof — likely with more favorable pricing options.
12. Inefficient services in your most important locations
You likely select fulfillment centers closest to your main customer base to reap in the most profits. If inefficiencies are happening at these locations, you may never gain the full ROI — even if you have fulfillment providers in other locations. Every area needs to have the most efficient and cost-effective services. For instance, if your primary customer base is in Dallas, you might want to consider the services offered by Dallas fulfillment centers.
13. Look for a 3PL with low employee turnover
One of the most common questions we receive from prospects concerns employee turnover. Wise from experience, they know revolving warehouse doors does not bode well for continuity and tends to be a recipe for confusion and hours lost.
If you constantly have to get acquainted with new warehouse staff and management, you may eventually tire of having to be the expert when it should be the other way around.
But finding a 3PL with low employee turnover is not necessarily an easy task. Few industries experience as much churn as the supply chain. While a Compensation Force study shows the average turnover across all industries is 17.8%, the often-cited percentage to aim for is closer to 10% — as long as it’s not the top performers who depart.
A look at the 2019 figures from the Bureau of Labor Statistics reveals employee turnover rates for certain industries soar much higher:
● Manufacturing: 31%
● Transportation, warehousing, utilities: 46%
● Retail trade: 58%
● Construction: 64%
So, if you’re looking for a 3PL with low turnover, the challenge is identifying the organization that bucks the trend. Third-party logistics providers, in turn, are up against forces that have affected all supply chain sectors in recent years: the much talked about talent gap and intense competition for those in the talent pool. Demand for supply chain professionals currently exceeds supply by a ratio of 6:1, with some predicting that ratio could be as drastic as 9:1, according to an article in Supply Chain Digital.
Compounding the challenge? The increased complexity of supply chain jobs demands more from the employees – and consequently, makes them even harder to find. The ideal employee should possess both tactical and operational skills as well as a solid understanding of analytics. And when companies do come across a desired match, they may — as the turnover figures indicate — struggle to retain employees courted by even more attractive offers.’
In such an environment, it becomes vitally important for 3PLs to create an environment that makes employees stick around. When you look for a 3PL with low turnover, consider a few factors:
Employment strategy
Does the 3PL rely on seasonal staff or year-round employment? Seasonal layoffs create a more unpredictable work environment where expertise and customer service can take significant hits. The alternative means greater reliability when it comes to performance, execution, and communication.
Values
Will you be one customer in a sea of others or will you be welcomed as part of a family? The way a company treats its employees can tell you a great deal about how they view customer relationships. Employees who feel valued are more likely to excel at customer care than those who don’t. Put to practice it can mean generous benefit packages, advancement opportunities, professional training, work-life balance, and a work atmosphere built upon respect and common goals.
Organization
Does your 3PL answer to shareholders or to you? Are employees cross-trained to perform a variety of tasks or is the organization so hierarchical that there is little room for broad expertise? There’s comfort in knowing you have the CEO’s ear should an issue arise rather than be caught in a loop of no answers. A flat organization also serves to empower the staff and make them apt at answering your questions even if they go beyond their daily scope of work. Most of all, it fosters a workplace where people want to build a career by helping you succeed.
At WSI, we take pride in our low turnover and a supportive work environment. Happy team members make for satisfied customers. So employee testimonials like this also spell good news for you:
“Employment with WSI has been very good if not an excellent experience. WSI has an old-school approach where a handshake is more important than a test score. Advancements within the company, over time, even time off, are not just handed off to the ‘select few.’ The company provides all the tools, personal protection, and gear, even relocation pay to other facilities, without question.
Anyone willing to do the obvious, such as having a positive attitude, attention to safety, and being reliable, can and will go anywhere within WSI. WSI also feels more family-oriented vs. the corporate (just another number). Those who are considering a career in the logistics field should take a close look at WSI!” — WSI employee
A 3PL with low turnover has already proven it has what it takes to attract and retain talented individuals. That should be a good sign for your business as well.
WSI has you covered
The WSI family of companies provides absolutely reliable end-to-end logistics services within the United States and globally. We’ve had a lot of practice. Founded in 1966 with a 30,000-square-foot building, we’ve grown to more than 10,000,000 square feet of rail-served facilities.
From planning to execution, we cover your complete logistics needs.
- End-to-end logistics solutions
- Full-service warehousing and distribution
- Tailored fulfillment service
- Complete transportation service
- Expert chemical logistics.
learn more about Third-party Logistics Services here.
Are you seeing signs that it’s time to move from in-house fulfillment to a 3PL relationship? Have you outgrown your current 3PL provider? We’d love to hear from you. We’ll design a solution that fully meets your needs and positions you for future growth. Contact us online, or give us a call at 920-690-9037.
