Many online sellers worry that swapping logistics partner will be a big headache, but, in truth it shouldn’t be, says William Walker, sales director of Walker Logistics.
From recent discussions I have had, it seems that fear of change is stopping a surprisingly high number of online retailers from achieving optimum supply chain efficiency.
Many retailers appear to harbour deep-rooted anxieties that switching their outsourced third party logistics (3PL) services partner will result in lost orders while the hand over from the outgoing 3PL to the new takes place.
Nervy online sellers have convinced themselves that during this period their customers’ orders will go unfulfilled and their business will, in effect, crumble.
Weighed down by these worries, they continue to employ underperforming fulfillment services partners for far longer than they should.
The notion that there will be a time during the migration process from one 3PL to another when the retailer’s outbound supply chain ceases to function and significant brand and customer loyalty problems will result, is a commonly held misconception.
Of course, it’s easy to see that for a successful online retailer, a major backlog could build up in a relatively short space of time and no doubt there have been such scenarios but, if the transition is managed properly, the order picking and shipping process should be seamless.
Think about your needs
But, before any online retailer decides to grasp the nettle and begin the search for a supply chain upgrade, it is advisable to spend a few moments reflecting on the issues behind the will for a fresh logistics approach.
For example, using ‘pounds per pallet stored’ comparisons as the principal motivation to switch 3PL is never sensible. There is a lot of competition in the logistics market and many of the larger providers operating in the arena use aggressive pricing policies to win business. But remember, many 3PL operators are great at moving pallets around, but they’re often not interested in – or don’t have the relevant skill sets to – undertake processes like breaking down cartons or other re-work activities and cannot offer the value-added services that internet retailers need.
Consider too that companies that opt to change third party logistics service suppliers on a frequent basis rarely, if ever, enjoy optimum supply chain efficiency. Quite simply, traditional B2B logistics or B2C e-fulfillment operations become more effective the longer the contract runs. Continuity – where possible – brings financial and operational efficiencies to a contract.
Managing the switch
So, assuming the decision to switch has been taken for the right reasons, how does a retailer introduce a new 3PL partner in such a way that anyone ordering from its site will be blissfully unaware that the transition is taking place?
Firstly, managing the hand-over of stock from the outgoing logistics company is the responsibility of the new contractor and in-bound movement plans that ensure stock is flowing into the new 3PL’s facility at a pace that allows not only a swift handover but that also set achievable receipt and put-away targets should be drawn up at early stage.
Indeed, this should be a key part of any preliminary discussions and implementation strategy and the hand-over timeline should ensure that incoming stock is switched to the new facility at a time that minimizes, or, ideally, eliminates, double handling costs and makes certain that the outgoing 3PL’s warehouse does not run out of product lines.
If there is any doubt about the new supplier’s ability to meet its early promises, back away.
Secondly, a sophisticated timeframe from the moment that the contract is awarded to the ‘go-live date’ must be created to capture all required activities, their deadlines and who is responsible for their completion. Because many different departments and elements have to come together to create the overall service offering, it is all too easy to miss something or assume someone else is covering it if everyone on both sides is not fully engaged in this process.
If this framework is set in place early on then a structured approach can be followed to make the transfer as seamless as possible – although it is good practice to establish a contingency plan that can be called upon in the event that something doesn’t quite go as it should.
Thirdly, depending on the size of the retailer and its order volumes, it always makes sense to try to time a move to coincide with any seasonal quiet times and or periods where, historically, there is a trough in order intake.
But even during ‘quieter’ times many retailers don’t want to shut down the operation for a period of time in which case, and linked to the above points, it is possible to operate dual sites for a short period so that no delay in order processing is experienced by the end customer.
This scenario, which essentially means that for a time the retailer will be sending orders to both the new and the soon-to-be ex-logistics companies who will hold a quantity of stock and fulfil a percentage of orders, brings its own challenges.
But, as long as the relevant IT integration is in place and enough stock is held at both warehouse sites, this approach allows the outgoing store to be phased out over time.
Rather like changing banks, you think swapping 3PL is going to be a big headache, but, in truth it isn’t. Feel the fear – and do it anyway!
William Walker is sales director of Walker Logistics.
Image credits: Walker Logistics and Fotolia