THIRD-PARTY LOGISTICS
5 Signs you should switch 3PL providers
By CJ Iannini
December 19, 2022
Partnering with a third-party logistics (3PL) provider to manage your logistics operations can help take your company to the next level. But sometimes, you may find that the 3PLs you are working with are not meeting the needs of your business.
There are numerous reasons why a company might choose to change 3PLs, but how do you know if it is the right time for you to begin evaluating other options? There are a few pain points that you may be experiencing, which can help signal that it’s time to start looking for a new 3PL partner.
In this blog, we discuss the five signs that indicate that it’s time to switch 3PL providers.
There are numerous reasons why a company might choose to change 3PLs, but how do you know if it is the right time for you to begin evaluating other options? There are a few pain points that you may be experiencing, which can help signal that it’s time to start looking for a new 3PL partner.
In this blog, we discuss the five signs that indicate that it’s time to switch 3PL providers.
#1: Your delivery speeds are lagging
Your customers expect fast order delivery. Some 3PLs can meet these customer expectations and offer ship speeds as fast as one day, like Amazon Multi-Channel Fulfillment (MCF) does.
To assess if your 3PL’s delivery performance is meeting industry benchmarks, you should monitor key performance indicators (KPIs) like the time it takes for your order to leave the fulfillment center (or “click-to-ship”), and the time it takes from order placement to delivery (or “click-to-delivery”). A drop in your 3PL’s ship speeds could have a negative impact on customer experience, and lead to a decrease in customer retention.
When thinking about your 3PL’s delivery performance, it’s not only important to consider click-to-delivery speed, but also keep in mind your lead times. Track your inbounding speed and note your 3PL’s speed and efficiency in moving your goods from “dock to stock” – i.e. receiving products and preparing them to be fulfillment-ready.
If your 3PL is not meeting your need for speed, it may be time to consider switching providers.
To assess if your 3PL’s delivery performance is meeting industry benchmarks, you should monitor key performance indicators (KPIs) like the time it takes for your order to leave the fulfillment center (or “click-to-ship”), and the time it takes from order placement to delivery (or “click-to-delivery”). A drop in your 3PL’s ship speeds could have a negative impact on customer experience, and lead to a decrease in customer retention.
When thinking about your 3PL’s delivery performance, it’s not only important to consider click-to-delivery speed, but also keep in mind your lead times. Track your inbounding speed and note your 3PL’s speed and efficiency in moving your goods from “dock to stock” – i.e. receiving products and preparing them to be fulfillment-ready.
If your 3PL is not meeting your need for speed, it may be time to consider switching providers.
#2: Your operating costs are high and you have to pay too many additional fees
Comparing 3PL providers’ pricing can be difficult due to the variety of pricing structures that are used by different 3PLs. The most important thing is that you get an understanding of the total cost of your 3PL's services by breaking down your fees into buckets including fulfillment, transportation, and storage. Then you can determine if your 3PL is offering affordable prices for the level of service they’re providing.
It’s always a good idea to carefully audit your invoices. You may find that your 3PL has added some additional fees to your invoice that they may not have discussed before you started working with them. Some 3PLs will charge you hidden fees like a manual labor or technology fee – these can add up and take a toll on your bottom line. MCF, on the other hand, has transparent pricing with no hidden fees and can even offer discounts on multi-unit orders.
If your 3PL is not competitively pricing its services, it may be time to consider switching providers.
It’s always a good idea to carefully audit your invoices. You may find that your 3PL has added some additional fees to your invoice that they may not have discussed before you started working with them. Some 3PLs will charge you hidden fees like a manual labor or technology fee – these can add up and take a toll on your bottom line. MCF, on the other hand, has transparent pricing with no hidden fees and can even offer discounts on multi-unit orders.
If your 3PL is not competitively pricing its services, it may be time to consider switching providers.
Stay up to date with new Amazon Multi-Channel Fulfillment features, best practices, and more.
#3: You are experiencing inventory management issues
Effective inventory management – which can enable you to reduce storage costs and improve on-time delivery performance – can be a complicated task for businesses.
A 3PL partner can help you optimize your inventory by offering real-time visibility into your inventory levels and robust reporting with critical insights about your inventory, like best sellers or excess stock. If you are experiencing difficulties in gaining this visibility or these insights or if you’re encountering discrepancies in inventory levels as you conduct checks, that may be a sign that your 3PL partner is not providing enough support on the inventory management front. Your 3PL should help with inventory management across your supply chain – from warehousing and distribution to fulfillment to customers.
If your 3PL is not helping you effectively manage your inventory, it may be time to consider switching providers.
A 3PL partner can help you optimize your inventory by offering real-time visibility into your inventory levels and robust reporting with critical insights about your inventory, like best sellers or excess stock. If you are experiencing difficulties in gaining this visibility or these insights or if you’re encountering discrepancies in inventory levels as you conduct checks, that may be a sign that your 3PL partner is not providing enough support on the inventory management front. Your 3PL should help with inventory management across your supply chain – from warehousing and distribution to fulfillment to customers.
If your 3PL is not helping you effectively manage your inventory, it may be time to consider switching providers.
#4: You want to scale your business, but are not sure if your logistics operations can support your growth
When your business is expanding across new sales channels and markets, you want to take advantage of that momentum instead of worrying if your logistics operations will be able to support and sustain your growth. Working with a 3PL that can’t keep up with the changing needs of your growing business can make your operations unmanageable and inefficient. As your business scales, you may find that your 3PL is lacking in the following areas:
- Infrastructure – Expanding across new sales channels means more customer orders, requiring you to have more space to store inventory. If your 3PL has limited storage capacity, that’s a sign that you may have outgrown that provider. Storage constraints will not be an issue with MCF – by selecting us, you can leverage the world’s largest fulfillment network, with over 2,000 facilities including more than 200 fulfillment centers encompassing over 200 million square feet.
- Geographical footprint – If you have recently entered a new geographic market, ask yourself if your 3PL has the presence to scale, whether it be domestically and internationally. Switching to a 3PL that has a global logistics network – like MCF, whose network spans 27 countries – will ensure you have the resources you need to support your expansion drive.
- Technology – As your business grows and your needs become more complex, you should ensure that your 3PL employs state-of-the-art technologies that empower you to optimize your end-to-end logistics operations. Your 3PL should be on the cutting-edge of the latest technological advancements in the logistics space, from warehouse robotics and automation to demand forecasting.
If your 3PL cannot support your business as it scales, it may be time to consider switching providers.
#5: Your 3PL’s support services leave much to be desired
In today’s business world, supply chain issues are bound to happen. When these problems arise, you want a reliable 3PL provider that is always “on call” and able to assist you in getting your operations back on track as soon as possible.
Some 3PLs only cater to large customers, leaving small- to medium-sized businesses unable to get the help they need, when they need it. A dedicated 3PL partner, like MFC, will build a relationship with you and provide the customer service level your business requires, so that you can avoid the frustration of working with chatbots or waiting endlessly for your provider to resolve urgent issues.
Is your 3PL overpromising and under-delivering on their SLAs? If you noticed your 3PL isn’t performing up to expectations, or that there has been an increase in damages claims, missed or late shipments, or other 3PL-related errors, your provider could be causing more issues than solving them.
If your 3PL is missing the mark on support services, it may be time to consider switching providers.
Some 3PLs only cater to large customers, leaving small- to medium-sized businesses unable to get the help they need, when they need it. A dedicated 3PL partner, like MFC, will build a relationship with you and provide the customer service level your business requires, so that you can avoid the frustration of working with chatbots or waiting endlessly for your provider to resolve urgent issues.
Is your 3PL overpromising and under-delivering on their SLAs? If you noticed your 3PL isn’t performing up to expectations, or that there has been an increase in damages claims, missed or late shipments, or other 3PL-related errors, your provider could be causing more issues than solving them.
If your 3PL is missing the mark on support services, it may be time to consider switching providers.
Conclusion
Switching 3PLs is a major decision. If you’re noticing any of the signs highlighted in this blog, you should take the time to evaluate your current 3PL, research other 3PLs out there, and decide if you want to make a change.
Changing 3PLs could give you the peace of mind that your operations are running smoothly and efficiently, and could help fuel the future growth and expansion of your business.
Changing 3PLs could give you the peace of mind that your operations are running smoothly and efficiently, and could help fuel the future growth and expansion of your business.
To start transforming your logistics and order fulfillment using Amazon Multi-Channel Fulfillment, sign up here.
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