Category: Back Office Managed Services

The success of a business in the modern world is highly dependent on its ability to manage its supply chain. This is particularly important during challenging economic times when businesses must remain agile and flexible in their operations to stay afloat. A 3PL (third-party logistics) provider can offer significant value to companies looking to improve their downstream supply chain management during such times. This white paper explores the benefits of using a 3PL for downstream supply chain during challenging economic times.

What is a 3PL?

A 3PL is a third-party logistics provider that offers logistics services to businesses. These services can range from simple warehousing and transportation to complex supply chain management solutions. 3PL providers take care of various logistics processes, allowing businesses to focus on their core competencies. They handle everything from inventory management to distribution, order fulfillment, and transportation.

Benefits of Using a 3PL for Downstream Supply Chain

1. Cost Savings

   One of the main benefits of using a 3PL for downstream supply chain is cost savings. During challenging economic times, businesses need to optimize their operations to reduce costs and improve margins. A 3PL provider can help businesses achieve this by offering economies of scale. 3PL providers have significant buying power, which allows them to negotiate better rates with carriers, suppliers, and other vendors. This can translate into lower costs for businesses.In addition, 3PL providers can help businesses avoid the costs associated with maintaining their own logistics infrastructure. This includes the costs of owning and maintaining warehouses, trucks, and other equipment. By outsourcing these logistics processes to a 3PL provider, businesses can reduce their overhead costs and focus on their core competencies.

2. Improved Flexibility

   Another benefit of using a 3PL for downstream supply chain is improved flexibility. During challenging economic times, businesses need to be able to adapt quickly to changing market conditions.

   A 3PL provider can help businesses achieve this by offering a flexible logistics infrastructure.For example, if a business experiences a sudden increase in demand for its products, a 3PL provider can quickly scale up its operations to accommodate the increased volume. Similarly, if a business needs to reduce its inventory levels to free up cash flow, a 3PL provider can help by offering warehousing and distribution services.

3. Access to Expertise

   During challenging economic times, businesses need access to expertise to help them navigate the complex and ever-changing business landscape. A 3PL provider can offer valuable expertise in downstream supply chain management.3PL providers have a deep understanding of logistics processes and best practices.

   They can help businesses optimize their supply chain operations and improve their efficiency. In addition, 3PL providers can offer insights into market trends and customer preferences, helping businesses stay ahead of the competition.

4. Scalability

   One of the key advantages of using a 3PL for downstream supply chain is scalability. Businesses can easily scale their logistics operations up or down depending on their needs. This is particularly important during challenging economic times when businesses need to be able to adjust their operations quickly to stay competitive.

   A 3PL provider can offer businesses the flexibility to scale their logistics operations up or down as needed. For example, if a business experiences a sudden increase in demand for its products, a 3PL provider can quickly increase its inventory levels and distribution capabilities. Similarly, if a business needs to reduce its inventory levels to free up cash flow, a 3PL provider can help by offering warehousing and distribution services.

5. Improved Customer Service

   During challenging economic times, businesses need to maintain high levels of customer service to retain customers and stay competitive. A 3PL provider can help businesses achieve this by offering improved customer service.3PL providers have the expertise and infrastructure to handle complex logistics processes, such as order fulfillment and transportation.

So your e-commerce store sells the best product on the market, but your order fulfillment process isn’t where it should be. If you’re not offering consumers a fast, efficient delivery experience, you could be losing out on business. When the order fulfillment process runs smoothly, you can increase your rate of repeat buyers and enable your business to grow. Whether you’re outsourcing your order fulfillment or fulfilling orders in-house, your fulfillment strategy needs to be top tier.

What is Order Fulfillment?

What is order fulfillment anyway, and why is it so important for your online store?

Order fulfillment embodies the steps taken to get products to customers. The fulfillment process begins the moment a customer places an order on your site, and is completed once the customer’s order is received.

Fulfillment can either be done in-house or outsourced to a 3PL (third-party logistics company). If you have a large inventory with a high stock-keeping unit SKU (stock keeping unit) count, partnering with a 3PL is highly beneficial.

Order fulfillment gets complicated and costly, especially as your business grows. If you become more consumed with order fulfillment, you will be less likely to launch new products and market your brand well. By allowing a 3PL to take over your order fulfillment, you can focus more on your business and strengthen your brand.

This is especially true for e-commerce brands with a large consumer base. Consumers expect their orders to be accurate and fulfilled on-time. Fulfilling orders in-house has a consequential impact on brand reputation. If deliveries are slow and there are too many mistakes, it negatively affects speed of service, and the likelihood of returning customers can decrease dramatically.

If you’re not familiar with how order fulfillment works, get acquainted with the end-to-end process and see how your business measures up.

The Order Fulfillment Process:

Receiving: The receiving process has the same requirements at a 3PL as when done in-house. The WMS (warehouse management system) receives ASNS (advanced shipment notifications), inbound deliveries are scheduled, goods are unloaded and inspected and labeled and relabeled as required.

Receiving stock and managing inventory are key in knowing the quantity, quality and demand of items. An expert 3PL should offer you full visibility of your inventory levels, and track items from when they arrive to the facility up until they’re delivered to the customer.

Storing: Orders should be organized and stored (either in-house or in a warehouse) after they’re received. Each item will have a different SKU, and should be stored separately. Storage types could vary based on UOM (unit of measure). If you’re a retail brand with high-end or delicate clothing, you might consider storing your items in a facility equipped with GOH (garment-on-hanger). This type of storage keeps items neatly on hangers and display-ready upon delivery. Or, you may have small, high-value items, that require a more delicate process, and need to be stored in a white-glove area.

Order Processing: At a 3PL, an order is picked and packed after the order is placed in the WMS. The order information should be on the pick ticket. Pick ticket information includes the contents of what is required to be picked and where the units are located in the warehouse. In addition, after the order has been picked via scanning technology, it will be packed according to the customer’s required expectations.

Before the order is packed, it goes through VAS (value added services). These premium services are tailored to the customer, and include things like customization, embroidery and branding. Customized services are vital to the success of an e-commerce company, as it sets a brand apart and adds to the overall customer experience.

Custom packaging is key, as the unboxing experience is vital in customer retention and increasing the rate of repeat buyers. According to a Westrock report:

• 81% of consumers tried something new because the product packaging caught their eye
• 63% of consumers have purchased a product again because of the appearance of its packaging
• 52% of customers are more likely to make repeat purchases from an online retailer that delivers premium packaging
• 52% of consumers have changed brands because of new packaging

Appearance isn’t the only thing, but it weighs heavily on customers. If you do outsource your order fulfillment, be sure your 3PL offers custom packaging.

After the order has gone through VAS and has been packed, it’s ready to be shipped from the warehouse.

Shipping: Before the order goes out, it’s given a shipping label and a packing list, which contains the order information (postal code, country code, service class, tracking number, date, package quantity and weight, address validation, and ship street, city and state). If you’re fulfilling orders in-house, you would have to create shipping labels through your carrier and then have them mailed. If your inventory is housed at a 3PL, they create the shipping labels and have the carriers pick up and transport the orders.

Again, you and the customer should have full, real-time visibility on the status of the order and be aware of its delivery.

Reverse Logistics: For a variety of reasons, returns happen. When they do, it’s important to have both an established returns policy and process. The goal of returns processing is to accelerate the return so customers can get their refund quickly. In the 2020 pandemic year, e-commerce returns rose to 70%, so it’s important more now than ever that your 3PL has a smooth returns process. If returns are handled well, customer satisfaction and brand loyalty can increase.

According to a Narvar consumer report,

• 76% of new customers who had an “easy” or “very easy” returns experience said they would shop with that retailer again
• 33% of REPEAT customers who had a “difficult” or “very difficult” experience would NOT shop with that retailer again

Keeping old customers and retaining new ones comes down to a simplistic workflow across the board.

The order fulfillment process is essential to your whole business. From having an organized inventory and customized unboxing experience, to seamless returns management, your business thrives when it operates with the right tools and management.

How’s your order fulfillment? Are you keeping up with consumer demands and offering customers a positive experience? If not, it’s time to reconsider your current strategy.

Read more about how Bergen Logistics can help with your order fulfillment.