Feeling Trapped by your 3PL?

Full Disclosure – I am the owner of a 3PL based in Missouri and those were the exact words I heard from a prospective client last week. In the past 18 months I’ve had several conversations just like that with people who are dissatisfied with their current 3PL (order fulfillment provider). The sources of dissatisfaction include: It’s taking two weeks to ship orders, shipping incorrect products, inventory shrinkage, massive damages, and worst of all, poor/zero communication from their provider. One entrepreneur said she felt trapped but couldn’t afford to make a move due to the possible disruption in service, the handling charges to exit, the freight expense and then the handling charges of the new 3PL. And there were no guarantees the next 3pl would be any better. It was the old devil you know vs the devil you don’t. Fortunately, not all 3PLs are alike. Many companies report their 3PLs are excellent partners and are the near perfect partner. On the other hand some 3PLs are operating beyond full capacity; are stretched thin due to personnel shortages; and in general, are struggling with increased volume. In my conversations with the disgruntled, they tend to ask excellent questions. Almost all wished they’d had the foresight to ask the right questions the first time around. What questions should you ask a 3PL? Here is where I would start…

  • they provide references of current clients similar to your business?
  • Can they provide numbers for shipping times, accuracy, damages, shrinkage?
  • logistics, problems will arise. What is the process for addressing them and who in the organization will you talk to?
  • Are most of the 3PL’s clients similar in size to your company? If your talking to a huge 3PL with mostly huge clients, do you really believe you’ll be important to them? On the other hand, if you are dealing with a mom & pop 3PL will they have the capability to handle your large volume?

Ok let’s fast forward… You made the decision to move to a new 3PL. How will you afford moving? First, consider what the poor service is costing you. Second, your contract likely doesn’t prohibit you from having a second 3pl. So, transitioning when you get new inventory replenishment may be an option. Have some or all of the new inventory go to the new 3PL. Another option would be to work with your new 3PL. Ask them to offset storage charges against a portion of the freight charges. Ask for reduced receiving charges as well on the initial inventory. If your business is attractive (high volume, low SKU count) many 3PLs will sacrifice today’s profits to gain a long-term profitable client.

Hang in there. You can find the RIGHT 3PL. Just be patient and ask a lot of questions!