Transitioning to a new third-party logistics provider may seem daunting, especially if you’ve been partners for a long time. However, existing partnerships may no longer support your continuous business growth. If this describes your situation, it is time to reassess your 3PL partner.
In this article, we will show you the steps for a smooth 3PL transition. We’ll also highlight the likely reasons to change 3PLs.
How to Seamlessly Transition to a New 3PL Partner
Once you have decided to switch, follow these steps for a successful transition.
Step 1: Create a detailed transition plan.
Make a timeline and assign relevant tasks to your team and 3PL provider.
Also, inform your manufacturers of the changes, like the new fulfilment centre address. Some things to note are:
- move-out date with your current 3PL
- drop-off date with your new 3PL
- warehouse assignment for specific SKUs (e.g. slow-moving SKUs to the new warehouse, fast-selling SKUs to the old warehouse)
- supply chain review (reorder inventory and quantity based on new warehouse location)
Step 2: Start the transition process.
Time your transition period based on your contract with the old warehouse. Then, instead of pulling all inventories out from your current provider, do it gradually. Keep some in the old warehouse while shipping others to the new 3PL to avoid stockouts and backorders.
During this process, monitor the new system and make adjustments, if needed, to ensure everything is running smoothly.
When the transition is complete, clear out the items in the old warehouse by running a promo or sale. This step explains why you should keep fast-selling inventory in the old fulfilment centre.
Step 3: Share the good news to your customers.
Despite careful planning, transitioning to a new 3PL can still disrupt operations.
So, inform your customers in advance. Notify them that temporary shipping delays may happen as you make logistics changes.
Use your product pages, website banners, or social media to spread the word. Also, emphasise that the changeover means better shipping options and customer experience.
Why Switch to a New 3PL Provider
Your 3PL partner plays a role in your business success through efficient order fulfilment. However, problems or signs of underperformance will only lead to a waste of resources, missed opportunities, or customer loss.
So, being proactive and knowing when to switch 3PL providers are crucial. Here are some reasons to consider.
1. Costly Mistakes Happen Too Often
Logistics errors are unavoidable. However, habitual shipment of damaged goods, cases of lost products, or failure to send to correct addresses is a red flag. Frequent order mess-ups make things difficult for your employees and become a reflection of your company. Worse, they make customers dissatisfied and angry.
Your business may experience an influx of complaints and bad reviews, too. These can impact your sales and drive potential customers away. Working with a more organised and reliable 3PL provider prevents this domino effect.
2. No Drive to Advance or Upgrade
Have you been using the same workflow, facilities, or technology since you started working with your current 3PL partner? If it’s been several years without change or advancement, your provider is not thinking long-term.
The ecommerce industry and its customers are constantly changing. Customers expect more hi-tech services, and businesses respond through better platforms and more streamlined processes.
However, your business growth lags if your traditional 3PL provider shows no signs of keeping up. Customers are also likely to find business somewhere else.
A good 3PL should think ahead. They continuously introduce solutions to improve current operations and avoid future problems.
These characteristics show that the 3PL provider values your business and customers.
3. Lacks Operational Scalability
Typically, starting businesses choose to work with small 3PLs. However, once sales and shipping volume increase, their current 3PL provider may be unable to adapt to these developments.
The best 3PL partner should have the ability to grow with you. They should have ample warehouse space, a network of delivery vehicles, and the right technologies for your increased customer demand or new product launches.
Also, if you plan to expand and operate in multiple locations, look for a new 3PL in a strategic site for efficient interstate deliveries. A well-positioned 3PL means more satisfied customers, fewer delays, and reduced shipment costs.
4. Substandard Customer Support
Open communication is a must in all business relationships. So, if your 3PL is often unresponsive, difficult to contact, or unreliable in giving timely updates, other problems can arise.
It can disrupt order fulfilment or tasks like handling returns, exchanges, or refunds. Lack of communication also delays solutions to tech issues or inventory emergencies.
Your logistics partner should help your business meet your goals, and transitioning to a 3PL with good customer support lets you achieve this.
Keep in mind that not all 3PLs are equal in this aspect. Some do not have 24/7 service, while others can only respond through email. Be sure the communication channels available match your needs before switching.
5. Poor Value for Money
Working with the cheapest 3PL provider you can find is not advisable. However, you should consider other options if your current 3PL partner is no good despite its premium price.
A 3PL known for its confusing pricing structures or hidden costs and fees will only give you headaches.
You’re not getting what you pay for if your 3PL provider is causing your business more harm than good. So, protect your business by finding an honest and transparent 3PL partner.
Look for one that has reasonable rates or offers cost-saving strategies. Ask for their 3PL costs to ensure everything aligns with your budget and business requirements.
What to Look for in a New 3PL Partner
Before transitioning to a new 3PL, you should research and compare your options first.
Make a shortlist of potential partner candidates. Focus on logistics providers that are familiar with your business or industry if preferred. Then, assess their services, facilities, cost, customer support, and technology.
For a more thorough screening process, you can also schedule a site visit to meet their team, test their software, and observe real-time operations.
Choose a 3PL Partner that Adds Business Value
Switching 3PLs involves extensive research, planning, and resources. However, once you understand the reason for change, finding a new partner could be your key to better business outcomes.
With the suggestions and steps in this article, you’ll make good decisions and continue to operate with minimal disruptions during the switch.
If you’re looking for a 3PL partner, contact our friendly team today. Our logistics experts can help you design a flexible system with solutions that fit your business needs.
