Business

3PL Fulfilment Guide for New Businesses

3PL fulfillment is the process of shipping products from your warehouse to customers. According to McKinsey & Company, explosive growth in the eCommerce industry, by 25% in 2020, has led to increased demands for 3Pl services. While 3PL is essential for every eCommerce business, it can also be complicated. 

In this guide, you’ll learn how to choose the right 3PL provider for your needs and implement a clear communication strategy so that everyone involved knows what’s happening at all times.

Research and Compare Different 3PL Providers

To begin, it’s important to do some research and get a sense of what your options are. The first thing you should do is look at the market and see what other companies are offering. This will help you find out which 3PL fulfillment providers offer the best services for your business type, as well as how much they cost.

There are three main things you should consider when choosing a 3PL provider:

  • Services and pricing
  • What kind of experience you’d like to have with them
  • Who can provide that experience

Evaluate the Costs

According to ModernRetail, as the threat of a recession grows, retailers are trying to save on fulfillment costs by closing warehouses and turning to automation. Chewy, an online pet retailer, recently said it would set up two additional automated fulfillment centers to expand capacity and decrease costs.

It is critical to evaluate the costs of your 3PL provider before making a final decision. When comparing different 3PL providers, look at their pricing structure, as well as their pricing options and contract terms. 

Review the Service Level Agreement (SLA)

The SLA is a contract between the business and the 3PL. It’s an agreement that outlines how the 3PL will fulfill your order from start to finish. You can expect certain things from them, such as:

  • Delivery on time or within specification (or both).
  • Good communication throughout the process.
  • On-time delivery at an agreed location.

Implement a Clear Communication Strategy

Beyond the logistics of picking a 3PL and setting up your account, there are some key steps to take to ensure that you have an effective relationship with your provider.

  • Be clear about expectations. Before you sign on with a third-party fulfillment company, make sure that you have a clear understanding of what they will provide and what they won’t. 

For example, if you’re looking for warehousing services only and not order management, ensure this is reflected in the SLA, so there’s no misunderstanding down the road.

  • Make sure there’s one point of contact for communication and decision-making. This is especially important if the 3PL is based out of another country or state. 

It’s important to identify who on their team will be communicating about issues related to your fulfillment needs so that questions are directed appropriately and quickly resolved when possible.

Test the System

Testing the system is essential to ensure that it can handle your products and orders. To do this, you should:

  • Test the system with a small batch of products. This will give you an idea of how quickly the system can process your products when they are uploaded in bulk. This will also allow you to iron out any bugs before you start using it for real orders.
  • Test the system with a small number of customers who have only ordered one product each before joining up as a recurring customer for their next order.

Monitor and Measure Performance

Monitoring and measuring your fulfillment performance is an essential part of running a business. It gives you insight into how well your fulfillment process is working and allows you to make improvements when necessary.

There are a few different ways that you can measure the performance of your fulfillment process:

  • Number of orders fulfilled per week/month
  • Average order size
  • Cost per order fulfilled

Continuously Improve

Continuously evaluate and improve your fulfillment process with the help of your 3PL provider to make sure you have the most efficient and cost-effective solution for your business.

Continuous improvement is the process of identifying and implementing small incremental changes to eliminate waste and unneeded activities, reduce costs, and improve productivity, quality, and customer service.

Be Prepared for Scalability

You should also ensure that your 3PL provider is capable of growing with you. Becoming a larger business will require more sophisticated logistics and different services than those you currently use. The 3PL provider must have the capacity to scale its operations for future growth.

Compliance and Security

As an online retailer, you’re responsible for ensuring that your business follows all the laws and regulations that apply to you. That means complying with relevant legislation on a local, national and international level.

Compliance is compliance with data protection legislation, privacy law, and other similar regulations. It means following the rules set out in these laws as well as putting appropriate security measures into place to protect your customer data from unauthorized access or use.

If you don’t comply with these laws, then there could be serious consequences for both yourself and your business – including prosecution under the Data Protection Act 1998.

According to Security Boulevard, a customer data breach is one of the worst things that can happen to an eCommerce business. It affects customers and can have a lasting impact on a company’s financial stability and reputation.

Conclusion

Even though the 3PL fulfillment trend has been around for some time, it’s still a very new concept to many businesses. We hope this post has helped you understand the benefits of working with a 3PL and shown you how easy it can be to get started.

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