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How Brands Can Improve Their 3PL Fulfillment Center Relationship

How Brands Can Improve Their 3PL Fulfillment Center Relationship

Streamlining logistics and supply chain processes is critical to a brand's success in today's competitive environment. Brands that create positive relationships with third-party logistics (3PL) fulfillment centers can seamlessly scale operations, streamline logistics, and improve customer satisfaction. Let's discuss how brands can enhance their relationship with 3PL fulfillment centers for mutual growth.

Understand Each Other's Goals
Brands and 3PL fulfillment centers must kickstart their partnership with an open dialogue that establishes clear expectations and a mutual understanding of goals and values. A relationship built on transparency allows for streamlined operations and fosters a collaborative working environment. Typically, problems arise on tasks that fall outside the 20% of the scope of work that drives 80% of the results. These small details significantly affect how the brand perceives the fulfillment center's performance as excellent, good, or bad.

Ensuring that your 3PL fulfillment center has operators who have a continuous improvement mindset is critical. Despite all the technology in operating a fulfillment center, it is still run by humans prone to honest errors. The essential component of relationship management is how these errors are corrected and mitigated, and corrective action plans are implemented and communicated to the brand. Whether the brand has its in-house fulfillment center or outsourced to a 3PL, challenges will arise. The most important factor in nurturing and further growing that relationship is how the challenges are mitigated.

In the digital age, brands must integrate their existing systems with the technological solutions offered by 3PLs. This integration facilitates real-time data exchange, making the supply chain more responsive and efficient. Brands should embrace technology solutions that enable them to have visibility into inventory levels, order status, and tracking information, fostering a harmonious relationship with their 3PL partners. Sometimes, brands are too young or small to afford implementation, and that's okay. This gap, however, must be filled by the 3PL fulfillment center to provide weekly and monthly reports in the form of a self-audit, holding themselves accountable for their performance just like they would be as an employee of the brand.

With deep levels of transparency and accountability, brands won't feel like their fulfillment center and service provider is hiding information, not being transparent, or lacking resources.

Embrace Continuous Improvement
Brands and 3PLs should adopt a continuous improvement mindset, always looking for ways to optimize processes and reduce costs. Regular performance reviews should be part of this strategy, where both parties collaborate to identify areas for enhancement, leveraging data analytics to drive informed decisions and optimize performance. At Ops Engine, we provide weekly, monthly, and quarterly self-reviews. Additionally, we host a quarterly business review for the brand to learn about our past, current, and future abilities and for us to learn about their brand's roadmap to prepare for their growth proactively.

Open Communication Channels
Maintaining an open and continuous line of communication is vital. Both parties should be willing to share feedback, be it positive or negative, to build a relationship grounded in trust and mutual respect. This could include regular meetings, reports, or even a cloud-based portal where both parties can view and manage operational details collaboratively.

"Communication is the bridge between strategy and implementation" - Arsen Janikyan.

Educate and Train Together
A learning culture that encourages sharing insights, expertise, and best practices can foster a successful relationship. Brands can offer product training to 3PL teams, ensuring they deeply understand the products they are handling. 3PLs can educate brands on the best strategies to optimize logistics and fulfillment processes to save or reduce costs downstream. The more optimized the products arrive at the warehouse, the less it will cost to manage the inventory, run effective picking, package in a cost-effective and eco-conscious manner, and ship smart through competitive bids for cost and speed.

Measure Performance

  1. Service level accuracy is the percentage of shipments processed with the agreed-upon service level divided by the total shipment number.
  2. Order accuracy is the percentage of orders picked without errors divided by the total number of orders.
  3. Delivery accuracy is the percentage of shipments that arrive on time and without damage divided by the total number of shipments. Although the fulfillment center does not have control of the parcel after it departs from the facility, they should monitor this intel to make better decisions on which carriers are used, renegotiating rates, filing claims for refunds, and providing feedback to the carrier's representatives to improve continuously.
  4. Accurate inventory management processes and tracking methods support proper stock levels, storage, and cycle count management. To improve inventory management, the brand can implement real-time inventory tracking and reporting, cadence stock level review, and work with its 3PL to optimize inventory management processes. 
  5. Dock-to-stock speed is important, but what's more important is the quality of the receiving process to ensure what's received is accurate and at the quality standards expected by the brand. An experienced 3PL in Los Angeles can solve dock to stock to porch challenge.
  6. Returns Management can be measured in multiple ways:
    ○ # of returns processed daily
    ○ Average time to process returns
    ○ Average time to stow returns that make the item sellable again
    ○ Damage rates and communication back to the brand's customer service team

Foster a Partnership Approach
Rather than viewing the relationship as a vendor-client transaction, brands should approach the relationship as a partnership. This approach fosters collaboration and encourages both parties to work towards shared common goals, encouraging innovation and driving mutual growth.

Collaborate on Sustainability Initiatives
Consumers increasingly demand sustainable practices. Brands and 3PLs should collaborate to develop and implement eco-friendly initiatives. This could range from optimizing packaging to reduce waste to implementing energy-efficient systems in warehousing operations. Collaborating on such initiatives promotes a stronger relationship and appeals to environmentally conscious consumers.

Leverage Each Other's Networks
Brands and 3PLs can mutually benefit by leveraging each other's networks for business growth. 3PLs often have extensive networks that can help brands expand into new markets, while brands can offer referrals and testimonials to allow 3PLs to acquire new clients.

If you want to go fast, go alone. If you want to go far, go together!

Be Adaptable
Lastly, brands and 3PL fulfillment centers should exhibit adaptability, understanding that the logistics landscape is continuously evolving. Being open to change and willing to adapt strategies and processes to the dynamic market conditions will keep the partnership resilient and long-lasting.

Building a mutually beneficial relationship with a 3PL fulfillment center is much more than a business contract; collaboration can drive brand growth to unprecedented heights. By understanding each other's goals, investing in technology integration, and fostering open communication, brands can build a relationship with 3PLs that is mutually beneficial, driving efficiencies and facilitating growth in a competitive market landscape. Embrace a partnership grounded in trust, collaboration, and a vision for mutual growth, and watch your brand soar to new heights.

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