Choosing the Right 3PL for Your Apparel or Footwear Business
Choosing a third-party logistics (3PL) provider is a strategic effort that should extend beyond evaluating cost and optimization. Often times, the largest shortcomings and constraints in the relationship are not discovered until after the dotted line is signed, and inventory has already been transported to the facility.
For many executives vetting logistics providers, some crucial aspects can be overlooked, eventually becoming a constraint during implementation which can ultimately cost more money and take more time.
Partnering with a Third-Party Logistics (3PL) provider can be a tremendous and costly undertaking making it crucial to be thorough during the selection process.
Consider These 10 Tips When Vetting a 3PL Provider:
1. Consider an Asset-Owned 3PL to Save Costs.
During your selection process, be sure to include third-party logistics companies who own and run their warehouses, trucking fleet, and advanced warehouse systems. Owning assets cuts outsourced trucking and/or warehouse costs that are passed on to the customer while Increasing supply chain efficiencies.
2. Choose the Ideal 3PL Location.
East Coast vs. West Coast 3PLs…. both or just one? The answer – Ideally, it would be more beneficial overall to centralize warehousing. Suppliers can decrease operational costs, increase efficiency, avoid duplication at numerous warehouses, optimize inventory management, and help ensure more accurate and timely order fulfillment.
3. Be Sure the 3PL can Grow and Expand With You.
Outgrowing any partnership in business can be costly. Housing your primary assets with a logistics provider who shows limited scalability practices can be a tremendous setback down the road. Your investment in them should be aligned with their ability to invest in growth to meet increased demand, physical space expansion, and potential sales channel shifts.
4. Make Sure you have Access to YOUR Data on Their System.
One of the most challenging components of partnering with a 3PL is the lack of visibility into their operation. Many 3PLs offer a portal for their customers, allowing access to inventory, receipts, and order inquiries as well as advanced reporting. This is a great benefit, and something that should be discussed with the 3PL provider during the selection process.
5. Evaluate Sustainability Practices.
Your 3PL provider should not only be taking their own measures in reducing environmental impact, but they should also be partnering with their clients to do the same in adopting best practices. While it is a ‘good to have’ now, it will likely become a ‘must have’ process in the near future.
6. Understand the 3PL Teams and Roles
Work with a 3PL that has a well-seasoned team of experts across all areas of the business that will be instrumental in onboarding your business, and effective in supporting it. Moreover, the 3PL understands and has serviced companies in the same industry as yours. This is especially important for apparel and footwear as the requirements are unique and can be extensive. You should feel confident in the experience and industry knowledge of the implementation team. Suggest a meeting with them and interview them as though you were hiring them internally.
7. Evaluate VAS (Value-Added-Services).
It is crucial during the vetting process to determine whether or not the 3PL has value-added services in place for their customers which can include labeling, repackaging, ticketing, embellishment, assembly, and more. A 3pl that can provide VAS enables you to concentrate on maintaining and growing your business. Removing hangtags from cancelled retailer orders and re-ticketing, unpacking solid size cartons and re-packing to meet a retailer’s assortment requirements are examples of what the 3PL team should be comfortable managing. Make sure these additional costs are also specified in your contract.
8. Be Sure There is Major Retailer Knowledge
The 3PL you select should have a strong presence and a deep history of working with and shipping to major retailers. With a myriad of vendor guideline rules across each retailer, it is important to align with a logistics partner who is experienced and knowledgeable in meeting retailer demands. Shipping accurately and on-time is often only half the battle among many major department stores. Label placement, ticketing, assortment packing, routing, carton IDs and other factors must be in practice in order to avoid costly chargebacks. A 3PL should have the tools and operational infrastructure already in place to meet retailer demands.
9. Ensure Seamless Integration with Your Business System.
This can often be the most overlooked consideration, resulting in the most costly and disruptive onboarding process when not factored into your decision to choose a 3PL. It is extremely important that the 3PL have the technical tools, protocols and staff needed to exchange documents like receipt notices, pick tickets, and inventory adjustments with your order fulfillment/ERP system. Not having an electronic data exchange in place means laborious, error prone, and time-consuming tasks for both you and your 3PL. Be sure to invite an IT member from either your team or your ERP provider’s team to have the discussion before choosing the 3PL to determine whether or not the communication and document exchange layouts can be achieved by all parties. A 3PL should have the ability to send/receive documents via API, EDI, XML, flat files, among others.
10. Get Referrals.
Feel confident that the 3PL keeps its customers satisfied. Ask to speak to a few of them, preferably customers in your industry who have the same or similar product and customers that you do. Do not be afraid to ask your ERP service provider if they have worked/integrated with the 3PL or know of them.
All of this can go a long way in helping to select the right logistics provider for you. Onboarding a new 3PL can be an expensive and time-consuming undertaking that you should only have to do once. Choose wisely.