What should you expect from your 3PL provider?
When warehousing and logistics become your weakest link of your business, maybe it’s time to outsource your warehousing operation to a third party logistics provider. No matter you are a starting up business or a multi-national cooperation, a 3PL provider can always help with your business growth. There are many benefits a 3PL provider can offer to your business, and you should expect good services from your 3PL company. We think the followings are worth mentioning beside the day-to-day tasks such as shipping and receiving.
Discounted shipping rate
If you are in the B2B or B2C business, shipping cost can be one of the highest expense account you have. 3PL companies generally can get better shipping rate than you do. This includes common carriers such as UPS or Fedex and trucking. Unless you have a very aggressive negotiated rate with these carriers, using a 3PL company can normally reduce your shipping expense by a very noticeable amount.
Always asking your 3PL provider for the cheapest shipping method possible. Warehousing companies generally have many shipping methods. If your company is mostly shipping B2C orders, let your 3PL provider to use local post instead of UPS. United Postal or Canada Postal is much cheaper comparing to UPS when shipping a small box. Of course, this is based on your 3PL provider has negotiated rates with both of the carriers.
Fast order turnaround
If your 3PL provider cannot send your B2C orders out within the next day or two, you probably should think about switching to another company. More and more warehousing companies are providing same day turnaround guarantee these days. So why would you stay with a warehouse who can only send your order out in 3 days?
When selecting a 3PL company, you should always expect your orders to go out within a reasonable time, or according to your vendor compliance with mass retailers. When your warehouse keeps asking you for PO extensions, this is usually a sign that something is going wrong.
Inventory loss prevention
Your 3PL provider should always be responsible for your physical inventory loss as long as your inventories are stored in their facility. There might be some exceptions, but generally, your 3PL provider should compensate you for your inventory loss.
When you shop for a 3PL provider, they will tell you all kind of great things. But before you sign anything, you need to make sure that your inventory is well taken care of by the warehouse, and it should be written on contract.
The bottom line is, when you see a $500 short in inventory at the end of your inventory count, you should expect your warehouse to pay for these missing $500. Never take the loss by yourself, because it is just not fair if they don’t pay. And there are so many 3PL companies in the market who will take full responsibilities for inventory shortages.
Inventory Management Software
A good, accurate and professional inventory management software or 3PL software is something you should expect from your 3PL provider. Your inventories and transactions should be recorded in the software and you should have unlimited access.
A lot of small business ignore the inventory management software their 3PL providers have, and never even used it once. They think it just save time to send an order by email, and receive order confirmation by email. You should know that your 3PL provider is probably using a software that is worth more than $100,000, but somehow you figured it’s much easier and efficient to use Excel for your inventory management?
You need to start using the inventory management software. You don’t have to do vlookup all the time because it does the reporting for you. You don’t have to go through your filing cabinet when an order is missing, because it stores it for you. You don’t have to manually enter your orders from your shopping cart into your Quickbook, because synchronization is a very standard feature that most WMS or 3PL software has these days.
Your 3PL provider should know what they are doing with mass retailers. If your warehouse fulfill your orders, they should also be responsible for any compliance charges your B2B customers deducted from you. The mass retailers in North American or anywhere around the world are known for deducting vendor compliance charges simply because they can with their purchasing power. Incorrect ASN, late appointment, wrong labels, early ASN, late ASN, oversized pallets, carton too big, carton too small and so much more can get you fined with the retailers. If this happens, you should expect your 3PL provider to reimburse you for the penalty. If they refuse to, maybe it’s time to shop around for another warehouse.