Articles Is It Time for a New 3PL?

“In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.” – Warren Buffett

Feeling like your relationship with your third-party logistics provider takes more energy that it should? While changing 3PLs might feel like a dramatic step, in some situations it might be the most effective way to move your business forward.

Why should you consider changing third-party providers, when is the best time to make that change, and how should you go about finding the right partner? Jeff Jones, vice president, business development, order fulfillment for Saddle Creek Logistics Services, recently shared his insights on this topic with MultiChannel Merchant.

Following is an excerpt from the article…

What You Need to Know When Changing 3PL Providers

Why Change Providers?

Whether you’re considering outsourcing for the first time or your long-term partner just isn’t measuring up, there are a number of reasons to change third-party providers.

  • Changes in order volume: If you have achieved significant business growth you may simply outgrow the capabilities of your 3PL. Or, if you experience dramatic fluctuations in sales volume due to seasonal promotions or business fluctuations, you may find that your current provider lacks the flexible space and staffing required to handle the peaks and valleys.
  • Increasing complexity: For many companies, order fulfillment has become quite complicated. You might decide to seek out a provider that can offer strategically located distribution centers, more robust order management technology or product customization capabilities to streamline your fulfillment operations.
  • Rising shipping and fulfillment costs: If warehouse space and labor, freight costs and/or technology requirements are taking a serious toll on your bottom line, it may make good business sense to find a partner that can reduce your overhead and better manage transportation costs.
  • Service failures: Ensuring a positive experience for the customer should be your 3PL’s top priority. Inventory issues, inaccurate orders and delivery delays are all telltale signs that it’s time to find a more qualified provider.

When Should You Make a Change?

When changing providers, it’s wise to carefully consider the timing of the transition. Many merchants’ search for a new provider coincides with the start of a new calendar or fiscal year – budgeting in the fourth quarter so they can begin operations in the first quarter of the new year. Ideally, the change can be made during a quiet period operationally.

It can also be helpful to transition to a new provider before adding a new product line or entering a new market. Of course, if service failures are an issue, it’s best to make the switch immediately.

If changing 3PLs makes sense for your organization, thorough and thoughtful planning will help to establish a solid foundation for a long-term partnership. To learn how to develop an effective RFP and plan for a seamless transition, read the full article.