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4. 3PL Migration Plan for Enterprise Brands: How To Switch Logistics Partners

3PL Migration Plan for Enterprise Brands: How To Switch Logistics Partners

With 2.14 billion shoppers online and counting, the eCommerce industry is expanding its dominance. The industry is ripe with potential, but with that comes competition, complex logistics, and increasingly high consumer expectations.

We all know impressing customers is essential to stay at the forefront of their minds and keep them coming back for more to accelerate business growth.

But where to start?

One of the most effective ways to make your brand memorable is to refine your fulfillment process. This upgrade may require you to switch your 3PL provider to one that better fits your brand’s needs and trajectory.

As an enterprise brand, there’s a lot to consider before leaving a 3PL, ranging from service-level negotiation to SKU tracking. But don’t be deterred. In this post, we’ll share scenarios where parting ways with your current 3PL is a smart move. We’ll reveal what you need for a successful transition that creates fulfillment processes your customers will love.

In this article, we’ll go over:

• Signs you need a new 3PL
• When to change 3PLs
• Tips for a hassle-free 3PL transition

4 Irrefutable Signs You Need a New 3PL

Packing boxes, loading trucks, and double-checking stock numbers are but a few of the tasks you’ll add to your team’s workload when moving 3PLs. You might second-guess your decision if you already have a hefty to-do list, so why switch in the first place? Let’s run through some circumstances where parting ways with your 3PL makes sense.

1. Your Fulfillment Is Expensive

As your store’s order volume increases, economies of scale should kick in to bring you more cost savings in fulfillment. But, if these savings fail to materialize or, worse, your shipping costs rise, it could be time to say goodbye to protect your margins and ROI.

2. Your 3PL Can’t Support Your Growth

Are you experiencing record levels of growth that your 3PL cannot scale alongside? This problem not only slows down your progress but can also cause your error rates to skyrocket, negatively impacting customer satisfaction. Remedy this as soon as possible by jumping ship.

Sometimes, a 3PL has an outdated tech setup. For example, they still use manual spreadsheets to monitor inventory. Other times, a 3PL doesn’t have the processes or organization needed to support new growth initiatives, such as supporting cross-border eCommerce and subscription boxes.

Whatever it is, don’t let your 3PL hold you back when it comes to growth—whether that means volume or sales strategy.

3. Mistakes Are Losing Buyers’ Trust

Every business makes mistakes. But it’s a bad sign if too many errors are causing customers to question your reliability or leaving you with hefty inventory losses. If you’ve raised the matter with your 3PL and haven’t seen much (or any) improvement, get out quickly to protect your brand reputation.

4. Fulfillment Is Your Next Competitive Angle

Perhaps your investors want to prioritize shipping and post-purchase care for the coming seasons. When shifting your focus to these logistics, it’s smart to shop around for a 3PL that can help you introduce highly optimized fulfillment operations and strategies to impress your customers, like same-day shipping and returns.

When Is the Best Time for Enterprise Brands To Change 3PLs?

Unlike smaller businesses that can move in a day or two, enterprise brands have to assess their unique circumstances carefully before switching to another 3PL. However, there are two times that work best for scaled businesses to migrate from one 3PL to another: off-peak seasons and either before or after major launches.

Off-Peak Seasons

With so much at stake (e.g., the Q4 rush), peak seasons in your store are inopportune times to switch providers. Your store’s seasonality will vary from one year to the next, so study your analytics to uncover quieter times on your eCommerce calendar.

Before or After Major Launches

Take note of all key business events and product launches. Also, talk to your marketing and sales teams about the mission-critical promotions they plan to run, influencer collaborations, and competitions that may cause sales velocity to spike.

As a precaution, review sales data before and after past launches to understand the sales volume you may need to accommodate during your move, and always keep buffer stock in your warehouse during the switch.

7 Tips for a Hassle-Free 3PL Transition

You’ve decided to take the leap and partner with a new 3PL. Such a big change may feel overwhelming, but with the right knowledge and execution, you can make your transition a seamless success.

Let’s discuss some checks and balances to complete before D-day.

1. Understand Your Business Needs

Before you begin hunting for your next 3PL, clarify the requirements a 3PL must meet to fit your business. This will help you choose a service provider to serve as your strategic partner and propel your brand to new levels of success.

To figure out what exactly your business needs, answer the following questions.

Goal Setting

• What are our goals for the next 12 months, two years, and five years?
• What order volume do we anticipate in the next year?
• How many SKUs do we expect to have over the next year?
• What products do we intend to launch over the next one to three years?
• Do we plan to expand into any products that require additional support? (e.g., hazardous or fragile)
• Are there any mission-critical regions where goods must ship from/to?

Competitive Analysis

• What does our current 3PL do right?
• What was missing from our last 3PL?
• What services look appealing that our existing 3PL doesn’t offer?
• How do our competitors approach fulfillment? What services do we need to outmaneuver them?

Finances And Admin

• What’s our budget?
• How much time do we need to execute a successful migration?
• Which team members will manage the transition? What will their roles be?

2. Research Suitable 3PLs

Once you’ve clearly defined your business goals and needs, it’s time to search for your 3PL match. Employ strict criteria to judge a potential 3PL, including:

• Experience — Your chosen 3PL should have expertise in your niche and be able to store and ship your product types.
• Service quality stats — On-time shipment rates should be high and error and product damage incidents low.
• Costs — Receiving, prepping, packing, shipping, returning, and warehousing are all fairly priced with no hidden fees.
• Indemnity cover — Your 3PL should have adequate insurance coverage to recover quickly from problems and shield your business from losses if problems occur in their service.
• Reputation — Read case studies and testimonials, ask to speak with past clients, and analyze reviews, noting what’s gone well and where the 3PL needs to improve.
• Capacity — A new 3PL has to handle your current and projected order volume and catalog size. They should also be flexible in their capacity to scale up or down.
• Staff availability — Your 3PL should have enough people on hand to work efficiently. Inquire about staff levels and how the provider manages staffing during peak seasons to maintain optimal service.
• Customer service — The best 3PL for your business understands your business. Instead of filing you as a number in their CRM, you should have a direct line to a dedicated account manager who knows your story.
• Technology — Your 3PL should avoid heavy manual or undigitized processes and tools. Extra points if they invest in AI or blockchain for better insights, visibility, and monitoring.
• Terms and conditions — Learn what is and is not allowed with your 3PL. They should match your business needs and requirements; for example, do they have restrictions on the types of products you can send to them? If so, how will this impact your business?

Once you’ve whittled down your list of potential 3PLs, conduct interviews and site visits to understand their capabilities.

Observe each provider’s culture, communication style, and vision to ensure it matches your brand. This will give you enough information to make an informed decision about who to work with.

3. Conduct A Risk Assessment

While you’re finishing up with your current 3PL and preparing to partner with your new one, turn on the pessimism; think of everything that could go wrong during your transition and immediately after; then, establish action steps to fix each potential issue to get you back on track if they occur.

For example, if you envision a truckload of pallets going missing while switching warehouses, you could mitigate the effects of this risk by holding back units of every SKU in your existing warehouse so you can continue to fulfill orders while you search for the lost goods.

4. Iron Out the Details of Your New 3PL Agreement

Before you sign on the dotted line, it’s vital you understand what you’re getting into.

Double-check the fine print on aspects like service times and duration, pricing, additional charges, support availability, and company vision.

Be sure to:

• Establish how you’ll communicate and keep track of updates with your new 3PL
• Understand and break down costs for receiving, picking, packing, and storing goods with the new 3PL
• Determine when you’ll need to scale fulfillment up or down according to your forecasts
• Know how long you’ll be under contract with the new 3PL as well as any break clauses
• Define and sign a service level agreement with your new fulfillment provider

5. Craft a Detailed Project Plan and Realistic Timeline

Outline the core tasks needed to make your 3PL migration successful. Determine milestones you have to hit and timelines to achieve your move while staying operational, and assign a budget to appropriate tasks.

Also, embrace paper and email setup reminders and status updates in your project management tools to stay informed on how your transition is progressing. Some areas to consider in your planning are:

• Sharing standard operating procedures and policies with the new 3PL
• Tearing down existing fulfillment shelves and equipment
• Tech integrations
• Choosing a data migration strategy to avoid duplicate or missed orders
• Sharing storage and supply chain data
• Ordering and shipping inventory to the right location
• Packing stock
• Hauling inventory
• Receiving stock at your new 3PL
• Liquidating aged and dead stock
• Setting up new fulfillment shelving and prep areas
• Updating purchase orders to include the new 3PL’s address and stock quantity requirements

Tip: Moves rarely go as planned, so always add buffers to your schedule and budget. Lay out each of the steps you need to take to keep the project on track.

6. Map How You’ll Stay Operational During the Transition

This process requires input from and communication with both your 3PL providers—lay out how you’ll ship orders, monitor inventory, and manage returns during the crossover period.

For example, will your existing 3PL manage shipping while the new one receives returns? Will you maintain access to your existing 3PL accounts to track stock accurately during the shift?—adjust your approach accordingly to the answers of these questions.

7. Conduct a Test Run Before Your New Launch Day

You want to ensure your new 3PL launch goes off without a hitch. Before your start date, conduct a series of tests to iron out any kinks.

You can zero in on tasks like:

• Meeting desired shipping times
• Keeping fragile items intact
• Navigating complex orders (missing shipping info, multiple product types, or rural addresses)
• Fulfilling expedited orders

Wrapping Up — Plan Your 3PL Migration To Optimize Logistics and Customer Experience

Moving 3PLs as an enterprise is a huge undertaking, and you shouldn’t make the decision lightly. Only switch if your strategy, schedule, and budget allow it, and consider the scenarios outlined in this article as further guidance.

Once you’ve committed to switching and have found the right fulfillment partner, you’ll need all hands on deck to strategize and execute your transition while mitigating risk.

Expect a few teething problems and unforeseen issues, and be willing to work through them to create a post-purchase experience that turns buyers into raving fans.

Ready to part ways with your fulfillment provider? Learn how MyFBAPrep can help you build a winning process.