How to Shop for a Fulfillment Provider

Mike DeFabis
Outside of the IDS Fulfillment Center

So, you decided that you need to outsource your order fulfillment or make a change from your current 3PL provider. If only finding the right fulfillment provider was as easy as buying hand towels on Amazon. Unfortunately, it takes much more work and effort to find the right fulfillment company to handle your operational needs. This blog from IDS Fulfillment will provide some insight into the best way to find fulfillment companies, compile an RFP and select the company that best suits your business needs.

Finding Prospective Third-Party Logistics Companies:

The first step in looking for a fulfillment provider would be to create a list of companies that, on the surface, you feel could be a good fit or at least can handle the services you need. There are many ways to go about creating this list. I would start with a Google search of 3PL companies. You can also look at companies that you, as a consumer, have great experiences with and see who they use, if they outsource fulfillment. Multichannel Merchant also publishes a list of Top 3PL fulfillment companies that can be a good start and the International Warehouse Logistics Association, the top trade group for 3PLs in north America, also has a tool on their website (www.IWLA.com) to help identify companies that provide outsourced fulfillment services.

Once you have your list, check out the company’s website and location to ensure they meet your needs both from a service side, but also geographically. Reach out to each of these companies and try to schedule an introductory call to get some preliminary questions answered and learn more about their experience with fulfillment. After this you should have a good list of between 5-10 companies that, on the surface, can handle your needs.

Request for Pricing Process:

Once you have created your list you will need to prepare a Request for Pricing (RFP). No matter how in depth you want your search to be, you should still send out some sort of standardized document to all the third-party logistics companies you are wanting to submit a bid. This will not only help the companies provide accurate pricing and information but will ensure that each company is basing their rates on the same data and also give you some control on formatting for comparison.

Ensuring that you provide the necessary data within your RFP for each order fulfillment provider to quote is key. The information needed will differ from retailer to retailer, but will generally include the following, order volume by month, average units per order, receiving volume by month, SKU and inventory information. If you have any special packaging requirements or uniqueness to your products be sure to include that information.

Some retailers conducting an RFP will do a separate Request for Information (RFI), but most will wrap the RFI questions in with the RFP. These are general questions that will help you get a better understanding of the fulfillment companies’ capabilities and ensure that they are qualified to handle you needs. Some areas for questions should include, experience, scalability, IT systems and integrations, reporting and visibility and culture.

Finally, the RFP should include a standardized pricing document. This will help to provide a way to compare apples to apples with each order fulfillment company. The pricing document is usually broken into 3 areas; Receiving, Storage, and Handling.

Narrowing the Selected Providers:

While price is a key factor in selecting a fulfillment company, it should not be the only factor. You need to ensure that the provider you select can handle your operational needs and the responses to the RFI questions are extremely important. Once you have reviewed the pricing and the answers to the RFP questions you can narrow the list to 2-3 providers, then, it is time to pay a visit. I cannot stress how important it is to visit a 3PL provider before making your decision. While words on paper can appear great, seeing the facility and meeting the team can tell whole different story.

Make sure to check references of customers. If you are touring their facility find a couple of customers that you would like to speak with on your tour and ask to meet with them. Every company has 1 or 2 customers that would speak highly, but if you selected a few at random it could be different.

Discuss the onboarding process to ensure you are comfortable with each step. How a company performs during the onboarding/startup process is critical, as that is the first impression that they are presenting. For a good partnership to be established with an order fulfillment service provider and retailer you need to get off on the right foot. If onboarding is not done properly it will lead to bigger issues down the road.

Make the Choice:

At this point you should be comfortable with your due diligence. You have reviewed their rates are competitive, their responses to your RFP indicate that they are capable of performing the work you need, you have visited their facility to verify their capabilities and culture, and you have spoken to a previous customer to get first-hand information about their experience. The choice may not seem obvious, but you and your team should feel confident enough to make a decision. Once the choice is made, work to set up a timeline for start-up and all the major milestones in the onboarding process. Now the real work will begin, and with the right choice, pay off big time in the end.

For more information on how IDS Fulfillment can help with your Third-Party Logistics selection, Contact Us Today!

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