At some point, just about every supplier will need to consider adding the services of a Third-Party Logistics Provider (3PL) to improve distribution and fulfillment while enhancing EDI. It's part of the natural evolution from startup to fully-fledged company — eventually your guest room can no longer serve as your warehouse. And you can no longer act as Chief Executive Officer, Lead Merchandiser, Design Director, Chief Marketing Officer — and Head of Shipping. Even the most independent thinkers will eventually realize they can’t do it all. They also understand that moving to their own full-scale distribution center isn’t an investment that makes sense either.
Enter a 3PL. They can be your warehousing, kitting, distribution, and fulfillment arm. When it works seamlessly, your products go directly to your 3PL, you supply the 3PL with order information — you’ll want that to be automated — and the 3PL gets your products out to buyers without a hitch. Returns run through them as well.
There is no shortage of 3PL providers, ranging from massive global conglomerates to smaller, independent firms. At first, it can seem like one is pretty much like the other. But as with most things in business, when you dig deeper you’ll realize there is more to consider. Much like when you choose an EDI and order processing provider, selecting the 3PL that is right for you and your company can be the difference between seamless, error-free exchanges and difficult, mistake-ridden ones.
Here are six questions to ask when you’re considering using a 3PL.
Some 3PLs will tell you that shipping is shipping, warehousing is warehousing, and fulfillment is fulfillment. But your product probably has some unique qualities, and your category is its own animal. Food, for instance, requires special handling that demands a level of knowledge at your 3PL.
Food products are an obvious specialty category, but they’re hardly the only one. Think about the different demands between warehousing and shipping high-end fashion versus, say, hard goods like power tools. Here at eZCom, we work closely with a company called 3rd Party Logistics Group because we appreciate their commitment to category expertise. Based in New Jersey 3rd Party Logistics Group is focused exclusively on the beauty category — clients trust them to deliver their products to customers and retailers in a way that reflects the unique personality of the brand. Organic beauty products have unique climate-control needs, and 3rd Party Logistics Group handles those as well. Just as we have kept our focus on EDI and order processing, we believe a 3PL that has specific category experience can offer more value.
The compliance standards of some of your trading partners can be demanding. If you get all the EDI details correct, can your 3PL carry the products across the goal line for you? Make sure your 3PL can integrate with your EDI provider so that information flows back-and-forth automatically — without errors and without requiring a lot of attention from you or your staff.
Fact is, neither situation is ideal. It’s a gamble to be someone’s first customer and it’s always safer to partner with a company with extensive experience. We’ve been providing EDI services since 2000, and that level of experience provides comfort to our clients. At the same time, you don’t want to work with a dinosaur. Just like when you’re choosing an EDI provider, make sure your 3PL has made the investments in technology and people to keep up with changing times.
Do your due diligence on this one. Make sure the 3PL you hire has impeccable financial credentials. If they’re not paying carriers on time or constantly changing their carriers because of financial pressures, you risk your own reputation as well. Ask for a clear and accurate look at their financials. And make some inquiries with current or former clients of the 3PL.
Nobody is perfect. Mistakes can happen. You want a 3PL that can navigate the proper channels to either mitigate the financial implications of an issue, or fight on your behalf to prevent additional charges. Again, experience matters here.
Some 3PL providers will claim they can handle your EDI needs themselves. But few will manage it as well as an EDI specialist. Here at eZCom, we work with numerous 3PLs, often at the request of our clients. What’s important is that the 3PL can fully integrate with the EDI provider. Or, to put it another way, make sure your EDI provider can integrate with your 3PL. Our in-house integration team embarks on a Discovery phase, and builds an integration solution that helps create a seamless supply chain. After all, when you’re hiring a 3PL, you are looking to add simplicity — not complexity. If EDI becomes a challenge with your 3PL, it’s time to consider another 3PL or an EDI provider that makes the process as straightforward and automated as it should be. Here at eZCom, we are proud of our ability to provide integration solutions, and we work with some excellent 3PL providers to help our clients gain the efficiencies they want.
Orders are what keeps your business going. But turning those orders into satisfied customers is how you build lasting, repeat business.
Throughout your supply chain, there are all kinds of places where the process can break down. You can prevent that from happening by choosing your providers carefully. Start with cloud-based EDI software that is backed by experts and a customer support team that can troubleshoot problems — and resolve them. Make sure that your EDI provider can work well with your 3PL provider. Demand that your 3PL not only has industry experience but the category expertise you need. Finally, make sure that both your EDI provider and your 3PL will offer ways to automate the exchange of data so errors are eliminated and time-consuming manual entry is eradicated.
Finally, take a moment to congratulate yourself. If you have built a business that demands the services of a 3PL, you’re doing things right. Toast your success for a moment — then keep pushing forward.