Hiring a third-party logistics company (3PL) is a big step for a business, however, it doesn’t have to be scary if you have a well-thought-out plan. When your business operations reach a point where you are outgrowing your warehouses, or you need to reach potential customers in a new region, consider 3PL Inventory Management. Hiring a 3PL can save costs both in the short and long term and can let you focus on production, while the 3PL handles the complexities around delivery, warehousing, and inventory. It’s important to note that not all 3PLs offer the same services, which is why it’s imperative to find the 3PL that best meets your business needs and can help streamline your operations. But finding that perfect 3PL requires knowledge of your business, your processes, and the ability to ask the right questions to get the information you need to make the best determination for your company. To find out if it makes sense for your business, you have to get into the details of your operations. Below are a couple of categories to consider as you develop a strong plan.
Identifying meaningful value propositions
Choosing a 3PL can be tricky and warrants careful consideration to avoid risk. When you find the right 3PL or a selection of potential vendors, the relationship should alleviate pain points in your operations and add value to your business.
On a basic level, a 3PL offers inventory space and performs the packaging and shipping function of your business. However, there are many other services various 3PLs offer that can add value to your operations. Certain 3PLs will design the packaging around your product. Some will manage customs; some will even build a customer-facing website on behalf of your business allowing your customers to place orders that your 3PL will automatically fill. So one of the first decisions a business needs to make is what it wants to gain from a 3PL. The better a business understands the ROI opportunities in these areas the easier it is to find the right fit and quickly maximize value.
Managing off-site inventory
When negotiating with a potential 3PL, you will want to understand what options they offer for managing the inventory that is under their control. The more detail you can give your potential 3PL about your current process and preferred means of managing, the faster and cleaner the negotiations will go. For instance, say your products need a routine quality inspection. Who performs the quality inspection and how does this report and data get inputted in the warehousing software? Another process to define is the specific procedures required for accurate inventory keeping. You should lay out the different transactional events, including their timing, so you know how your system should reflect each transaction. You may also want to think about what kinds of technology the 3PL uses. For instance, is their system from a well-known vendor in the space, have they heavily modified it, or are they using a very old version? Here you will want to understand how reliable their system is going to be for both your operations and your integrations. Laying out these questions ahead of time can seem tedious but will prevent delays, unnecessary costs, and mishandling of goods.
Planning the integrations
Understanding the nuances of how your business is going to interact with the 3PL is a must before you begin sending orders to be fulfilled. Again, this is another area where details reign supreme. One important distinction may be between what a sales order and a warehouse order mean to your 3PL. For example, to a business, the term “sales order” refers to a request by a customer for items the business may have now or in the future. However, a 3PL may use the term to mean a “warehouse order” which pertains to items and products the warehouse has on hand and can ship immediately. This distinction and similar issues need to be ironed out to ensure a successful integration. Other considerations include how to audit inventory levels represented in each system, and how your business handles purchase orders, receipts, and shipping documents. Understanding what documents and transactions need to be transmitted, and to whom, will ensure accurate inventory tracking and timely shipments, all of which are critical to having a successful business.
Get experts who know the right questions
Hiring a 3PL is a big deal and laying out the right plan is essential to reduce your risk and costs with the project. If it’s your first time with 3PL inventory management it can reduce risk and save money to seek out experts with experience helping businesses integrate with their chosen 3PL, who know the right questions to ask, and understand what’s possible. At Strategic Solutions NW, we have experience conducting seamless 3PL integrations for dozens of businesses. Get in touch with SSNW for information on our solutions to working with a 3PL.