How to Seamlessly Switch 3PL Providers

Switching third-party logistics (3PL), providers can be daunting, but it is sometimes necessary for companies looking to optimize their supply chain. You may have begun to notice your existing provider is unable to meet your growing business needs. This indicates that it might be time to consider an alternative logistics partner. However, switching 3PL providers involves several factors, from cost-effectiveness to service quality, so it is important to take the time to find the right provider for your business. It is necessary to thoroughly investigate your new 3PL partner and confirm the transition to a new partner won’t cause significant business delays. You can ensure a seamless switch to your new 3PL provider by following the steps outlined below.

When is the right time to switch 3PLs?

While there is a truckload of reasons you may decide to switch providers, there are a few common red flags that will indicate it is time to begin switching 3PL providers. They are as follows and in no particular order:

• Consistent mistakes – Mistakes are bound to happen, so the issue is more about the consistency of errors. If your provider gives excellent service 99% of the time with an occasional mistake, that is life. However, if the pattern of incorrect orders, mislabeled addresses, damaged products, missed delivery deadlines, or lost products happens regularly, it’s time to switch.
• Reactive vs. Proactive – The logistics industry changes rapidly, and your provider should consistently improve. A reactive company makes improvements once there is a problem and is slow to adopt new technologies and processes. A proactive logistics provider invests in new strategies and products that streamline fulfillment and improve customer service before they become problematic. If your provider hasn’t improved their infrastructure or customer experience lately, it is likely a reactive organization.
• Old or Segregated Technology – Whether the technology your provider is using is old or simply unable to integrate with your modern sales system, it is time to find a new provider. Having obsolete technology will slow down not only the growth of your business but also the speed at which you can solve fulfillment problems.
• Struggling to Scale – Businesses can often easily handle fulfillment in-house when launching. However, once they hit a pivotal threshold where they need to outsource orders, using a smaller fulfillment company can be tempting. It is crucial to evaluate your growth plans because you can quickly outgrow your 3PLs capacity and have to make another jump. If your existing provider struggles to scale with your growth, it is time to consider alternatives.

Besides the red flags triggering a switch, selecting a slower season in your sales cycle is equally essential. In other words, you don’t want to attempt to switch 3PL providers during your busiest season. The process to switch providers can take as long as several months and as short as a few weeks. Falcon Fulfillment provides our clients with dedicated account managers and onboarding specialists, so switching 3PL providers is as seamless as possible.

Following these steps ensures your switch to a new 3PL provider goes as smoothly as possible. Researching potential providers, comparing them side-by-side, negotiating your contract, and creating a transition plan will ensure that your switch to a new 3PL provider is seamless and successful.

Following these steps ensures your switch to a new 3PL provider goes as smoothly as possible. Researching potential providers, comparing them side-by-side, negotiating your contract, and creating a transition plan will ensure that your switch to a new 3PL provider is seamless and successful.

Steps to complete before switching 3PL providers

Clarify your business needs

In order to find the best 3PL partner, it is vital to be clear on your current and future business needs. Spend some time evaluating how your existing provider is falling short and what services, communication cadence, scalability, and costs are needed for your success. This is the first step because it will lead your investigation and evaluation of new 3PL providers.

Review your existing contract

Unquestionably, the best time to switch providers without additional hassle is at the end of your contract. However, sometimes the service is subpar so dramatically that it is worth the headache. Regardless, it is important to review the terms of your existing contract as you search for a new 3PL partner. The contract should outline cancellation procedures, fees associated with canceling, and if any current breaches of service would nullify the agreement. Furthermore, reviewing your contract will highlight issues you want to be addressed or remedied with your new fulfillment partner. Be informed and prepared to negotiate a favorable new contract when the time comes.

Interview potential partners

Interviewing potential 3PL partners is crucial to finding the best match because they become an extension of your brand. The best 3PL companies look at their relationships with their clients like business partners rather than clients. When their customers succeed, they succeed and when sales increase, their invoicing increases. When interviewing, there are a few key questions to determine if they are the right fit.

• How are you different from our existing provider? Have a clear idea of what your expectations are when switching fulfillment companies. In other words, know what you are looking for and be direct in asking if the new fulfillment team has the capabilities to meet your needs. Most fulfillment service providers do the basics of distributing products, but how do they go above and beyond the basics? How flexible are they as you scale up and down seasonally? Do they manage returns and customer service? What is the structure of their pick and pack fees? How clear and transparent is invoicing? These are just a few ideas to get you started.
• How easy is it for your technology to integrate with their platforms? One of the benefits of partnering with a 3PL is using their software. Often you can utilize modern shipping, inventory, and returns management programs without additional investment. That being said, it is crucial to determine if your existing technology is compatible with the systems they currently use. Beware of 3PL companies that say, “Oh, I am sure we will be able to have them integrated.” This is a red flag. If they have never heard of the systems you use or vice versa, running tests before you sign a contract is essential.
• Where are their distribution centers located, and are there expansion plans? One of the greatest benefits of partnering with a solid 3PL is due to leveraging multiple shipping sites. This allows your business to lower shipping costs and improve delivery speeds. Depending on where your primary customer base is or where you plan to launch can determine which 3PL company will best suit your needs.

Review your supply chain.

Once you have interviewed new 3PL providers, it is time to review your supply chain and determine new transit times. Depending on where the new centers are located will impact order and delivery timelines. In addition, make sure to fully understand and follow your new providers receiving protocols to minimize delays or complications. Most customer-focused 3PL providers can assist in reviewing your supply chain and guide you on making further order adjustments.

Slowly begin the transition to the new provider.

While it might be tempting to cut ties with your existing provider and ship all your inventory to the new 3PL immediately, that could be a recipe for disaster. The prudent way to transition is a slow progression whereby you move all new orders to your new provider and continue to fulfill orders through your existing provider until you have adequate stock levels and processes to make the switch. This gradual transition helps to prevent stockouts and backorders.

Keep your customers informed.

No transition is without its complications. This is why it is vital to keep your customers informed of the changes and any new processes they should be aware of, including shipping charges, delivery times, and liquidation of old products. After all, making an order fulfillment change can also allow you to make some product changes as well. Share the good news with your customers not only to keep them informed but to get them excited! Switching 3PL providers will likely give your business more options for your customers, like international shipping or 2-day delivery, etc.