This is part two in a two-part series. Read part one here.
In part one of this two-part series, we talked about how you should use itemized quotes to create a basic apple to apple comparison for pricing structures before choosing a fulfillment service partner.
Unfortunately, the world of 3rd party logistics (3PL) is never that easy. A really good partner isn’t just about how much you spend, but how much you can save by working with this one over that one. Although it’s important to understand that you may ultimately end up paying a bit more for services from one company or another, it’s equally important to realize how much that extra cost could save you in the long run.
The Value of Data and Reporting in a 3PL Setting
When all your apples look more or less the same, it gets trickier to choose the right 3PL.
After all, if they’re all the same, what does it really matter who you go with? The truth is that pricing is only the very beginning of your efforts to secure the very best fulfillment partner for your business. The next step is all about data and the numbers matter so, so much.
Here’s an example:
Let’s say “Bob’s House of Fulfillment” and “Joe’s Fulfillment Company” are both competing for your business. You’ve heard that they’re both very good at their jobs, never lose packages and generally get the job done.
But, when you ask Bob for data on his fulfillment processes, he’s not able to give you much beyond how many packages he moves and how much volume his company does yearly. Joe, on the other hand, can tell you exactly how long it takes the average package to be picked from the warehouse, how long it takes to move it to the pack floor, the time it takes to pack it, the average cost of shipping that package and a thousand other data points that might seem like overkill to you right now.
Bob may seem nice enough, and he may mission accomplish every single time, but Joe will be the one who will save you money with each and every package. Not only will he be able to better support you if things go wrong, he has the technology and the talent to ensure that your costs are always shrinking. That data he has is pure gold for your business—and that’s why it’s so important to you. Fulfillment tech is the key to cost savings on each and every package you send out of your warehouse.
Before you sign on the dotted line, ask about your new partner’s data. If they don’t have any or they won’t tell you about how much effort they’re making to constantly improve their efficiency (and can prove it), you should probably keep shopping. You can also take that data and use it to compare your 3PLs head to head leveling the playing field even further!
