Delivering goods at the earliest to the desired customer has become one of the major challenges for ecommerce businesses these days. Due to Covid-linked-lockdowns it has become difficult to provide next-day and same-day delivery. These days most of the ecommerce businesses has outsourced the delivery services with 3-PL Providers. No doubt the 3-PL Business fulfils the need of offering speedy delivery of that of ecommerce business, but there are some loopholes because of which the relationship between ecommerce business and third-party logistics providers is getting affected. Many companies are bringing the outsourcing operations back to home. Why is this happening and whose fault is it?
To begin with, either it’s a business relationship or personal relationship, a vital role is played by both the parties in the form of their contributions and responsibilities towards each other. Likely, to make a outsource operation successful both the Ecommerce business and 3-PL Service provider have to fulfill the responsibilities on their part. In this blog, you will find the key to build strong and successful business’ 3PL Relationship.
Why client bring the outsource activities back to home?
- Set of belief: Most of the time companies at the time of outsourcing partnership believe that the third-party provider is charging high where they can perform the same functions at less cost.
- High pricing: If the service provider does not agree with the offered price or they agree initially and then with time increase the outsourcing cost, the client thinks of withdrawing contract.
- Lack of transparency: When there is lack of transparency on the operations going on between both the parties leads to end of the partnership
- Expected Services Not provided: In every service level agreement if expected services are not provided to the client the outsourcing relationship eventually comes to an end
- Customer’s supplier policy no longer supports supplier outsourcing
- Lack of provider’s security: If the service provider is suffering from spoilage, theft or damage of a client’s products and is unable to control the situation, the client will become insecure and bring back the outsourcing in home eventually.
What things does Client business keep in mind before outsourcing
- Planning:
Before outsourcing, proper planning should be done by the client on the basis of what are your business requirements and which warehouse is best suited for your business. This will help you in giving a clear picture of your ideal warehouse and where it should be located.
- Finding the Best Service Provider
On the basis of planning done, try searching for the desired warehouse which fulfills all your business requirement and also analyze the additional services if any of the warehouse can offer you.
Factors To be Considered:
- Your business needs: you should compare the services provided with that of your business needs for a successful outsourcing, don’t rush while choosing the logistic provider because once service is outsourced, for a long term the contract is signed. So, choose wisely keeping in mind all pros and cons associated with it.
- Location: When it comes to choosing a new logistic service provider, location is a prime factor. Where the warehouse is geographically located will play a critical role in how your business operates. Also, while choosing do check the warehouse proximity to motorways, transportation links and your customer base.
- 3-PL Cost: Cost is another key factor while choosing a warehouse which is often overlooked by many people. While choosing make sure that not only warehouse cost to be considered but also consider the other charges associated like receiving and delivering goods.
- Communication:
Communication is the key in every contact business so is in outsourcing. Before outsourcing 3-PL services, there should be no ambiguity in terms of what kind of services you are expecting from the service provider. Until and unless detailed information about the products and specific outcome is not disclosed to the prior bidder, they will not be able to provide you with the same and stand up to your expectations.
Which Things to disclose and discussed thoroughly at the time of outsourcing?
- Business operation that is supposed to be outsourced.
- All your requirements and expectations
- All the accurate data related to product master
- Key Performance Indicators that are going to be used
- How will planning and execution of the contract takes place
Why sharing information is important at the time of outsourcing?
One of the main reasons why many 3-PL relationships go off track is lack of sharing of enough data. For instance, while outsourcing for warehouse services, clear description for all the weights and dimensions of the products and how the goods will move from one place to another is short time. This information will help the service provider in designing storage spaces and pick slots so that everything goes smoothly. This will also help in providing a give an estimate for the freight charges to the business.
Also, explaining the operations properly including all the negative and positive aspects to the service provider will prepare him in advance to face the upcoming consequences in a better manner and they can even try to reduce the chance of mishappening or loss.
The Key to a Good 3PL Relationship
If you are facing disputes with a 3-PL relationship, dumping it immediately is not the solution. Try to work on it as outsourcing relationships are similar to marriages. It may result into long and satisfying working relationship if booth the parties work on the issues and resolve them at the earliest.
For having good 3-Pl relationship key is OPENNESS/ COMMUNICATION
Both the parties should share all the
- Information
- Data about your products
- Transactions
- Your customer bases
And keep all this confidential.
To sum up, for a long-lasting outsourcing relationship both the parties must be trustworthy towards each other. There should be continuous communication about the operations taking place as well as in problem solving situations there should be a collaborative approach. However, it is said by logistics bureau that outsourcing partnerships are just like marriages, sometimes the relationship between clients and providers breaks down. In order to prevent this breakdown, both the parties are equally accountable and being transparent for all the doings towards each other.