How to build strong relationships with your 3PLs, according to 4 experts in the fulfillment space.
Fulfillment is the last stop before a customer physically interacts with your DTC brand. And the quality of that experience plays a huge part in whether or not someone shops with you again.
Roughly 66% of consumers will leave a bad review when a package shows up damaged (or never arrives at all). And 40% will do the same when shipping takes longer than promised. Get enough of these reviews, and they can detrimentally impact your brand's sales.
So, how can you control your brand's fulfillment quality – especially if you're outsourcing that part of your business? Well, you improve the relationship with your fulfillment center, of course. Do that, and your 3rd-party partners are wildly more likely to meet your needs (and customer expectations) on time, every time.
But admittedly, "improving the relationship" is easier said than done.
So, we asked 4 leading fulfillment experts from Capabl, ShipBob, and more to share their best advice for strengthening your fulfillment center relationships. Here are their top 12 tips (organized by expert):
(Psst – most of these tips can also be used to improve your manufacturing and supplier relationships.)
Aaron Alpeter, Founder of Capabl
Aaron Alpeter is the founder of the fulfillment-tracking software Capabl. And in his experience, the most significant contributor to rocky fulfillment relationships is a lack of transparency.
"Everybody signs a contract and negotiates SLA with their fulfillment center. But there's visually no easy way to [see if which of the partners is complying with the agreement]," Aaron said.
And that's where his first tip comes in:
1. Understand your SLA
SLA is short for service-level agreements. These are the terms that (should) guarantee a specific compliance rate for accurately shipping out your orders. For instance, your SLA might state that if you give the vendor an order by 2:00 pm, they'll ship those orders that same day 98% of the time or more.
But without someone keeping score, there's no way to know if fulfillment centers are actually meeting their goal. That is until you get an unhappy customer email saying their order still hasn't shipped. And at that point, emotions run high because the customer experience has already been negatively affected.
"You end up finding these [issues] in the heat of the moment, and it's always emotionally charged," Aaron explained. "But scorecards allow you to get ahead of the problem."
However, here's the catch: You can only keep score if you know the rules. So, familiarize yourself with what your SLA expects from your third-party logistics (3PL) partner and your brand.
2. Create an internal scorecard for transparency
Once you know the rules outlined by your SLA, build a scorecard. One that outlines the success criteria for your fulfillment partners and clarifies how you measure compliance.
According to Aaron, your scorecard should rely on data from both sides of the partnership to accurately show the percentage of shipments the fulfillment center gets out on time and correctly. And it should be shared with everyone who has stakes in your brand’s order fulfillment game.
Minimum, this scorecard should track:
- When orders were placed with your brand via Shopify, Amazon, or another ecommerce channel.
- According to the fulfillment contract, the latest date that each of those orders should've shipped.
- Whether or not the item shipped by that date (this can be a binary yes or no).
This way, brands can visually see how shipments are going with a real-time compliance rate. And they can get ahead of any fulfillment problems before the customer notices, keeping emotions at bay.
"[If you can] see that an order didn't ship before the customer recognizes it, you can correct it accordingly," Aaron told us. This keeps small, human mistakes from turning into massive ones and saves ecommerce companies from that nagging feeling that maybe they should switch 3PL providers.
3. Improve your relationship before you jump ship
"[Creating] happier customer is an important piece," Aaron insisted, recognizing that sometimes that means switching fulfillment providers when it starts to impact your brand's reputation.
"But there's also a real cost to changing your fulfillment center," he called out. So, while your first reaction might be to switch partners when things go wrong, it's not always the best idea.
It can take roughly 6 months to find a fulfillment center, vet them properly, and make the transition. With growing ad costs and supply chain issues, staying with someone who knows your SKUs (versus switching every 9 months) might make more sense financially.
But say you're really fed up with your current fulfillment partner and have a scorecard to prove that they consistently miss the mark. Then, Aaron suggests one last-ditch effort before officially switching: visit your current fulfillment provider (you can also do this virtually).
This experience can provide transparency on the people and processes behind their work. "Nothing replaces putting names with faces and observing how things actually work," he told us.
And who knows, you might just realize that an important process (like how you communicate incoming orders or set up a new product launch) is broken. And fixing it could save the relationship and optimize your fulfillment operations.
Kristina Lopienski, Director of Marketing Communications at ShipBob
Kristina Lopienski is the director of marketing communications at ShipBob (a leading global fulfillment provider).
Her overarching advice? Your relationship with your fulfillment centers is a partnership. And that partnership goes both ways and requires clear communication from each party.
4. Regularly provide feedback to your fulfillment partners
Any good 3PL wants to hear customer feedback (especially regarding fulfillment) because it impacts what they work on next. "Your input often shapes the product roadmap, prioritizes new feature requests, and even [informs] new fulfillment center locations," Kristina explained.
Meaning, don't be afraid to raise your hand and share what works and what doesn't with your fulfillment center. If you have never provided feedback to this partner before, start by asking your account manager how you can provide suggestions. This will naturally open a line of communication. Then, make it a habit to share your thoughts and feedback.
"You may find that [the 3PL] has already launched something for your needs or has it in the works," Katrina told us. But if you never raise your hand with feedback, you might not learn about the new feature for months.
5. Ask what your 3PL’s other customers do better
Katrina also suggests asking your 3PL what other customers are doing. This way, you can proactively learn when better options are available and implement them yourself.
"[Brands can and should] ask what features other customers have adopted, so they can further streamline and optimize their fulfillment strategy," she shared. But you can also ask more generally about other ecommerce businesses' best practices.
For instance, you might discover a way to reduce your dimensional weight through custom product packaging – while also improving the unboxing experience. Or maybe there's a better warehouse location you could use based on where your customers are.
6. Inform fulfillment centers about any upcoming events
According to Katrina, "fulfillment centers [need a] heads up on big events to be ready to process and ship the order increase on time."
A strong partnership depends on transparent, 2-way communication. And the more data and information you share upfront, the better equipped a 3PL is to help you. Similarly, when your 3PL offers its insights and updates, you can streamline your warehousing processes long term. It's a win-win.
Pranay Srinivasan, CEO of Manufactured.com
CEO of Manufactured.com, Pranay Srinivasan, has been in the manufacturing business for nearly 30 years. And he strongly believes that providing convenience and value will improve your fulfillment relationships (plus your manufacturing and supplier relationships too).
7. Make your relationship convenient
"Retail brands with 10k+ shipments a year should focus on convenience by doing everything [the fulfillment partner] needs and paying by the service," he explained. That way, the fulfillment partner doesn't feel taken advantage of, and the brand gets everything they pay for.
For instance, this might mean having a dedicated account manager or negotiating menu-based a-la-carte pricing for each fulfillment service.
You can even ensure that every service meets your brand's expectations by creating robust standard operating procedures (SOPs) for your fulfillment partners.
These SOPs should outline exactly how you expect these partners to, say, intake purchase orders and ship out customer orders. That way, everyone is aligned, and everything is done consistently.
"Make [the SOP] simple but not easy," Pranay advises. "Easy would be 'just call us.' But simple means providing steps 1 through 5 and onboarding with Zoom." The latter ensures that you free up your team's time by empowering your fulfillment partners to work autonomously.
8. Proactively solve potential fulfillment challenges
Your brand can also improve your fulfillment center relationships by proactively thinking through what challenges your 3PL might face and providing possible solutions.
For instance, 3PLs need to operate within your costs and their margins. So, you might want to bundle products to reduce shipping costs. Or maybe unkitting bundled items if they don't ship well together.
Another common challenge is finding the most cost-effective shipping packaging. So, Pranay suggests that you "match products to suggested packaging upfront. This will help you assess packaging and shipping costs beforehand."
In other words, don't leave how you want each product shipped up to your 3PL. Instead, if you sell soft t-shirts, and a customer buys less than 3 of them, create an SOP that says to ship that order in your branded large envelopes.
When brands underestimate their shipping by volume, it can cause both partners infinite pain (like not getting the product there safely or at cost).
By thinking through all these variables up front, you ensure that resources aren't unnecessarily and repeatedly dedicated to making the same decision. And there are no surprises about how much it'll cost.
9. Be transparent about your inventory levels
Like your business, 3rd-party logistics providers want to optimize operations for their long-term viability. So, being a convenient and valuable client makes you a crucial part of their future success. And it ensures a strong, mutually-beneficial relationship long-term.
And you can support your 3PL in this mission by providing transparency around your inventory levels. How so? Because staying in stock without rushing to process intakes directly impacts your fulfillment center's success and profitability.
Pranay suggests you go about this by "showing intake and keeping sell-thru dates current based on historical benchmarks from data across your customer base for similar products." You can even track all this in a single source of truth like Cogsy. That way, this information is available for all parties at a glance.
For instance, via the Cogsy + ShipBob integration, you can track the physical location of inventory, when it was shipped, and whether the customer received it.
And when your stock levels start running low, replenish inventory with plenty of time for your fulfillment partner to receive and process the shipment.
The best inventory management tools (including Cogsy) will even send you a replenish alert, reminding you to restock. So, you always place your purchase order in time to avoid a stockout. Just make sure you tell your distribution center that the replenishment is on its way and when it'll arrive so they can prepare accordingly.
Alex McNealey, COO of Thuma
Alex McNealey is the COO of the DTC furniture brand Thuma. But he's been pioneering ecommerce fulfillment and supply chain management best practices since his time at JCrew in the '90s.
And according to Alex, your 3PL relationship is only as good as the accuracy and frequency of the information you share.
10. Provide weekly forecasts to respect your 3PLs viability
"3PLs are constantly managing space utilization and staffing considerations to ensure profitability and viability as a company," Alex explained. "And the key inputs are your inventory levels and shipment volumes." But the problem is these numbers constantly change.
So, Alex suggests sharing weekly forecasts with your 3PL provider, whether manually via spreadsheets or automatically with Cogsy. These reports should cover:
- Projected demand for the next month (or more)
- Incoming purchase orders (what's in them and when they'll arrive)
- Any unfulfilled sales receipts
The earlier you get this information (especially the forecast and incoming POs) to your fulfillment centers, the healthier the partnership. Because, as many of the experts have pointed out, your 3PL can better support your needs the more information they have.
11. Consider your long-term plans with 3PLs
In addition to current data, Alex suggests considering your long-term plans with a 3PL to choose the right one before you outgrow it.
"In terms of capabilities and geographic footprint, think about where you want to be 5 years from the start of the partnership," Alex explained. "Consolidating to 1 provider with global views can help drive process consistency, data reliability, and reduced overhead."
Plus, aligning all involved parties from the get-go can ensure the partnership meets your needs – now and in the future. And if it's not the right partnership (say they can't scale to where you'll be in 5 years), it's better to know now.
12. Know your fulfillment center’s strengths and weaknesses
No 3PL partner is perfect. So, by understanding your fulfillment center's limitations (especially around scaling, postponement, kitting, or specialized add-on work), you can work together to overcome them. This ultimately keeps your operations efficient and alleviates potential frustration.
You can do this by auditing your fulfillment partners' processes. This way, you can streamline certain steps and remove others to drive quality results. And you can see where your end-all customer experience might start falling short.
After all, "3PLs are storing and moving material experts. Alex reminded us that they're not experts in systems, data management, or complex order-routing capabilities for a multi-footprint solution."
But to preserve the relationship, Alex recommends using a 3rd party tool for these audits, like an order management system (OMS) or enterprise resource planning (ERP) solution. Ideally, whichever one you choose should integrate with your 3PL's warehouse management system (WMS). That way, this auditing process is constantly happening and as seamless as possible.
It takes a lot of work to get customers to the fulfillment part of their journey. And if you don't invest in your fulfillment center relationships, it could be the piece that's hurting your retention. But if you take these experts' advice, you can start improving your partnership today!