15 Key Questions to Ask Before Choosing an Outsourced Fulfillment Partner

Tags: 3PL, Customer Service, Fulfillment, Supply Chain

Patrick Randolph, Fulfillment Director, Logistics Plus Fulfillment Solutions, 585-596-9960

In a highly competitive market, outsourcing order fulfillment can provide most companies a competitive advantage. The right provider can cut costs, improve customer service, allow you to focus on core competencies, and help you stay ahead of the competition by managing your entire supply chain.

Is outsourcing your fulfillment the best option for your business? Maybe you think your order volume is too low or perhaps think finding the right fulfillment partner will require too much time and effort. What if your choice is the wrong one? Or perhaps you fear that relinquishing control over your order fulfillment will result in missed deadlines.

The right fulfillment partner can give you unparalleled service that can help your organization reach never-before-seen levels. Your goals need to be conveyed to the fulfillment company and their commitment needs to be obtained. Here are 15 important questions to ask before choosing a partner.

1. Do you offer a service guarantee?

In recent years, service guarantees have become an industry standard. The service agreement should include how quickly your orders will be shipped and what happens if it is not met. You should be sure they are willing to put their guarantee in writing.

2. What is your accuracy rate and how do you compute it?

Many fulfillment providers state their accuracy rate, but do so in a way that can be deceiving. For example, a company that states their accuracy rate is 98.5 percent may be computing that rate on the number of boxes shipped. If they compute it on the number of orders shipped (with each error computed against the entire order) the rate may drop to 95 percent. You should ask the accuracy rate based on the number of orders.

3. What happens when there is an error?

Your fulfillment provider should make good on their mistakes. Prior to signing a service agreement, be sure the provider will not charge you for fulfillment or shipping on their mistakes. They should also arrange for the retrieval of the incorrect items and reship the correct order at their expense.

4. Does your technology integrate with my website?

A successful fulfillment provider will offer you a way to seamlessly pass orders from your shopping cart to their order management system. They should also provide you with a way to batch upload or manually enter orders if a seamless solution is not possible.

5. Will I have online access to my account information?

Fulfillment companies should be able to provide you with real-time access to your inventory, order information, and charges through a secure web interface. The better fulfillment providers will provide you access to dozens of standard reports.

6. Do you have a dedicated account manager or a team?

There can be benefits to both types of account management. A dedicated account manager acts as an extension of your business. They become very familiar with your needs and expectations and act on your behalf within the warehouse. You should speak with the person that will be your account manager prior to selecting the provider.

A team of customer service representatives can be beneficial if your company does not have a need for the fulfillment provider to be familiar with your needs or expectations. Having a team means that you can contact any one person within the organization to have your needs met.

7. What shipping companies do you use?

The ideal partner will offer many alternatives. UPS, FedEx, and USPS are typically used for parcel shipments. The provider should provide access to at least two of these companies as a labor strike or shutdown could result in carrier delays. A great company will provide access to multiple trucking/LTL companies.

8. Do you provide discounts on shipping rates?

As an aggregated shipper, the fulfillment provider typically receives discounts from UPS and FedEx. You should ask if they pass along any of the savings to you. If they are unwilling, ask if they will use your shipping number with the carrier.

9. How large is your warehouse?

We suggest that you find a warehouse that is large enough to handle your anticipated growth, but not so large that you get lost in their warehouse. A good rule of thumb is to ask if they can handle triple your current space requirements. You should also ask what will happen if your volume/space requirements are half of your current volume. The ideal fulfillment provider will expand and contract with your business.

10. Does your company insure my inventory?

The fulfillment company should provide coverage in the event of flood, fire, theft, or accidental damage while the inventory is in its facility. You should ask what coverage they have and the procedure for handling a claim. They should provide a copy of their policy upon request.

11. Do you have minimum or maximum order volume requirements?

Your fulfillment partner should provide an idea as to the minimum or maximum amount of orders it can handle. Many companies will “out price” you if you do not meet minimum requirements while others will restrict your growth by not allowing you to exceed a pre-set volume. The ideal partner will be willing to grow and contract with you.

12. Is there a long-term commitment?

You should never sign a long-term contract unless there is a way out if the service is unacceptable. The ideal option is to have a short-term renewable agreement or a month-to-month contract.

13. What information do you collect and how secure is the data?

The last few years have seen numerous stories about consumer information being stolen or mistakenly exposed. Your fulfillment provider should only collect the data necessary to perform their service. They should also explain how long that information is kept, who has access to it, and what their privacy policy is.

14. How do I pay for your services?

Many companies require weekly payment for fulfillment and shipping charges. Some invoice monthly while others do a combination of both. Beware of companies that make you prepay for shipping. Companies should offer credit card payment or direct debit from your business checking account.

15. Can I review your standard service agreement?

Any provider offering a contract or service agreement should provide a copy of their standard service agreement upon request. Review the agreement and if you have any questions or need an explanation be sure to ask.

Remember that outsourcing fulfillment is supposed to save you time and money and eliminate the hassle. Even if you require a modest amount of fulfillment, outsourcing should be considered. The expertise provided to set up warehouse space along with shipping systems can be enough of a factor to outsource. Let the fulfillment provider manage the warehouse, software, shipping, receiving and fulfillment, carrier relationships, insurance, and all the other costs associated with your supply chain. That way you can focus on sourcing and selling great products to your customers.






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