10 Common 3PL Mistakes (And How to Avoid Them)
Taking the leap to outsource your logistics or switch logistics partners can be scary. After all, no one knows your product or your customers better than you do. But working with a 3PL partner can give you time to work on what really matters, like a new product launch or a change in your strategy. Check out these common 3PL mistakes people make when choosing a partner so you can find the perfect fit.
1. Waiting Too Long to Outsource Your Logistics
We hear far too often about clients who waited to look for a 3PL partner until they were sending 500 orders a month out of their spare bedroom. While it’s never “too late” to find a partner, planning the transition well in advance will make everything smoother.
Your new 3PL partner will be able to schedule new stock shipments to their warehouse and slowly transfer over your processes so that your customers won’t even notice the change.
People also wait too long to switch from a 3PL provider they aren’t happy with. It may be a tough conversation that no one wants to have, but if your current 3PL provider isn’t living up to you or your customers’ standards, you need to start planning your transition immediately before the problems get worse. You don’t want to end up dealing with missed shipments, unhappy customers, and a bad relationship with your provider, in addition to the added work of switching to a new company.
2. Splitting Up Services
One of the most common 3PL mistakes we see is going with separate companies for third party warehousing and distribution. While it may appear to mitigate risk, it is also likely to cost more and cause more frustration than it solves.
By choosing just one partner, you only have one call to make when your policies change or when you have a new product. You’re also likely to save money in the long-run by having a single contract. Plus, if you go with a smaller 3PL partner, you’ll have the same point of contact for everything you need, which will help you build trust and confidence in your relationship quickly.
3. Choosing a Variable-Rate 3PL Provider
3PL providers with variable rates can be tempting. They can provide a super affordable launch for your business, but they can also cause unexpected fees and charges that won’t you see until you get your bill. Especially as your business grows, knowing exactly what you owe your 3PL provider will help you budget and keep your costs under control.
Variable rates also mean that both parties spend more time nickel-and-diming one another than they do actually working. With a flat-rate contract, you will only have to negotiate your contract once, and then you’ll know exactly what your bill will be each month from there on out.
4. Not Doing Your Homework
These days, anyone can have a web presence. A 3PL company can have a website without having any real experience or customers. In order to find a true 3PL partner, you’ll need to look for both knowledge and experience.
Don’t be afraid to ask your potential 3PL partner for case studies or a professional reference. If they provide consistent, excellent service to their clients, they should be able to give you a long list of recommendations.
If you ship something with specific restrictions or guidelines like dry foods or medicines, you should also ask about their experience and certifications for your product. Working with a partner who knows your product from day one will help smooth your transition.
5. Not Being Transparent
Treating your projections and estimates for next year like a trade secret is another common 3PL mistake. While you may be hesitant to share your information with anyone outside your organization, your 3PL partner should serve as an extension of your own team.
You’ll need to take the future of your business into account when selecting a 3PL partner to make sure they can grow alongside your goals. If you have a new product requiring shipping certifications or expect to triple your business in the next year, make your potential 3PL provider aware.
If your sales are declining or your business is struggling, transparency is just as important. Your 3PL partner can help you eliminate expensive overnight shipping or make other changes to your 3PL plan to save you money.
6. Treating 3PL as a Product, Not a Partner
Some businesses think that signing a contract with a 3PL partner is a once and done transaction. But the truth is, you can only get out of a 3PL partner what you put in.
If you treat your 3PL partner as a business deal and not a lasting partnership, you’ll struggle to make the most of what they have to offer. But if you grow a strong relationship, they’ll see your company as their own and may even come to serve as an adviser for your business. All of that translates to better attention to detail and greater return on investment for you and your business.
7. Not Trusting Your 3PL Partner
Distrust can make any partnership rocky. It can also cause you to micromanage, which is a waste of time, and the reason you hired a partner to be your third party warehousing and distribution expert.
If you’ve done your homework and chosen a 3PL partner you feel can do the job, try your best to give them the benefit of the doubt. It will take time for them to learn the intricacies of your product and process, but they manage inventory and shipping for dozens of companies not unlike yours. Spend your time doing what you do best, and let them do the same.
8. Expecting Perfection on Day One
While your 3PL partner will do everything they can to make the transition to outsourcing seamless, there are likely to be questions and hiccups early on. In the early days, a little trust and patience will go a long way.
If you have questions or concerns in the first few weeks or months, don’t hesitate to bring them up. But do so with the mindset of a partner who wants their new fulfillment team to be successful. Accusations and anger only harm your relationship and cause further miscommunication. Giving your 3PL partner the same respect and understanding you’d show a new employee will pay off in the long term.
9. Outsourcing Only as a Way to Save Money
Outsourcing is likely to save your company money. But if that’s the only reason you’re opting to work with a 3PL partner, you’ll need to adjust your mindset to avoid one of the most common 3PL mistakes.
Working with a 3PL partner is likely to change your daily life at work. If you’ve been the one managing shipping, fulfillment, and customer service beforehand, you know how time-consuming it can be to constantly put out fires. When you outsource, you free up time internally to do the things that matter, like bettering your product. Just make sure you have a plan in place for any affected employees and that they understand their new responsibilities and roles.
10. Not Documenting Crucial Processes
If you have a specific way of handling returns or refunds that you expect your 3PL partner to follow, write it down. If you have VIP customers who need to be catered to, regardless of cost, let your 3PL partner know.
While your 3PL partner is likely to have different processes than you, don’t be afraid to get into the nitty-gritty in the places where it matters. Attention to these details will prevent customers from noticing the change and will help with retention through the transition.