Your choice of a fulfillment center partner is one of the most critical choices you will make. But what are the questions to ask a fulfillment center operator?
Many fulfillment RFPs regurgitate the same tired questions and fail to get at the core issues. To help prevent this from happening to you, here are questions you might want to consider tossing into your 3PL fulfillment RFP – or into the follow-up conversations you’ll have with your short list of finalists.
Some are just variations on familiar themes. Others are a bit more…direct. But all should inspire your prospective 3PLs to provide answers that go beyond the typical canned responses – and get you closer to the outsourced fulfillment relationship that will truly take your growing business to the next level.
When determining which questions to ask a fulfillment center, how you ask those questions matters.
DON’T ASK: Do you have 10,000 square feet available at your facility?
INSTEAD, ASK: How much room for additional business do you have in your facility?
Let’s say you’re looking for Atlanta eFulfillment services. While you may feel like you’ve already accounted for the precise amount of space, labor and throughput you’ll need at an Atlanta fulfillment center, it’s always wise to consider what might happen if your company has a Black Swan-like sales spike or grows more quickly than expected. You want a 3PL partner that can scale fulfillment operations to meet your needs today, and well into the future.
DON’T ASK: How large is your distribution network?
INSTEAD, ASK: How much additional capacity does your entire fulfillment center network have? Where is it located? And what kind of value can that add to my supply chain?
As customer expectations for fast delivery accelerate, chances are good that you will eventually need a national fulfillment warehouse network. So even though you may only be looking for eFulfillment services in a single market right now, it’s smart to carefully consider where each of your potential 3PL candidates might be able to serve you farther down the road – and whether or not they have the bandwidth to do so.
DON’T ASK: Do you collect performance data for reporting?
INSTEAD, ASK: What key fulfillment metrics do you track, and how do you leverage that information to improve performance?
Virtually every fulfillment provider collects data to some degree, but not all 3PLs understand how to use that data effectively. Therefore, when compiling your list of questions to ask a fulfillment center, you really need to dig into the provider’s data capabilities. Understanding which order fulfillment metrics to collect enables your partner to continuously improve. Conversely, an eFulfillment service provider that fails to gather data will struggle to identify problem areas in the fulfillment operation.
Simply put, you can’t improve what you don’t measure. At a minimum, you want your provider to track on-time shipping, receiving efficiency, inventory accuracy, and shipping accuracy. However, you’ll want to work closely with your order fulfillment services provider to identify the right metrics for your specific goals and operation. Additionally, you’ll want the partner to share core metrics with you regularly so you can benchmark its performance.
DON’T ASK: Do you have B2C fulfillment experience?
INSTEAD, ASK: What percentage of your operation – and network – is dedicated to eFulfillment?
If you were trying to find the right physician to help you deal with a specific medical condition, which would you choose: a specialist who addresses many such cases every day, or an internist who treats your condition only occasionally?
While eFulfillment isn’t brain or heart surgery, it’s also not simple or as similar to B2B distribution as some service providers would have you believe. It helps to work with an eFulfillment specialist. So, make sure every 3PL you’re looking at is either a) treating fulfillment as its core business or b) has a fair amount of focused B2C fulfillment experience.
DON’T ASK: Will we have the attention of your company’s key executives, if needed?
INSTEAD, ASK: Can we have your CEO’s mobile phone number?
This is one of the most important questions to ask a fulfillment center representative. Most 3PLs will claim that you’ll have full access to their company leadership after the contract is signed. However, that doesn’t mean that you actually will, which is why it’s good to test the veracity of this promise.
If your prospective 3PL’s answer is no, that should be a red flag. If you’re not important enough to warrant a little bit of the boss’s attention, what does that say about the overall importance of your account to the provider? You may never need to use the number, but there’s a lot to be said for knowing that you can actually pick up the phone, dial a 3PL’s top executive and either get an answer or have your call quickly returned.
DON’T ASK: Can you fulfill orders from Amazon?
INSTEAD, ASK: Can you achieve and maintain Seller-Fulfilled Prime (SFP) status with Amazon?
Many online sellers start out leveraging Amazon as a primary sales channel. No matter how large your order volumes get, the visibility offered by the Amazon platform is hard to beat. However, as order volumes climb, the cost-effectiveness of Amazon’s FBA service begins to drop.
Fortunately, you don’t have to give up your Amazon customer base just because you want to get away from FBA. To keep your Prime seller status, however, you need a 3PL that can meet Amazon’s Seller-Fulfilled Prime requirements for fast shipping. To be a viable alternative to Amazon FBA, your 3PL must be able to ship out Prime orders for delivery in the allotted time.
DON’T ASK: How many employees does your facility have?
INSTEAD, ASK: What’s your associate retention rate, and how does that compare to the industry average?
When it comes to outsourcing eFulfillment services, few companies ask about how a potential 3PL manages and retains its people. That’s ironic when you consider how people-intensive most order picking operations are – and how important fulfillment warehouse worker retention is in today’s challenge labor market.
Before you sign on the dotted line, take a closer look at how well each of your potential 3PL candidates supports and interacts with its associates. An excellent rate of retention suggests that a shipping and fulfillment 3PL is probably treating its people right. By contrast, a higher-than-average rate of turnover might be cause for concern.
DON’T ASK: Which parcel carriers do you use?
INSTEAD, ASK: Can you leverage your relationships with parcel carriers to get a reduced rate and lower my shipping costs?
Most eCommerce sellers don’t have the authority or the shipping volume on their own to get more than a negligible discount from FedEx, UPS, USPS, or regional carriers. However, a national fulfillment 3PL leverages the combined volumes of all its customers to secure better rates with parcel carriers. As such, prospective fulfillment providers should be up-front with you about their parcel carrier relationships and discounts to facilitate an educated decision on your part.
DON’T ASK: What kinds of fulfillment systems does your facility use?
INSTEAD, ASK: How many transactions or orders are your fulfillment systems currently supporting, and how much more volume can they handle?
In this IT-intensive age, most providers will have some sort of WMS, not to mention myriad other technologies. The important question for you is, are those systems scalable enough to support the growth of your business and the various capabilities you may require in the future, such as integration with other systems and with material handling equipment?
While a company’s limited IT infrastructure needn’t automatically put it out of the running for your business, it should at least inspire subsequent conversations about how – or if – the provider is planning to improve its systems in the future.
DON’T ASK: Can you help with returns?
INSTEAD, ASK: Do you have focused SOP and technology to support returns management?
Almost 21% of items purchased online were returned in 2021, according to the National Retail Federation. Meanwhile, 95% of online shoppers say that the returns experience will influence their decision to make a repeat purchase from a brand. Returns were once an annoyance in fulfillment, but now they have become essential to the customer experience. As such, eTailers can no longer afford to partner with a 3PL that can’t process returns efficiently.
Ensure that you select a 3PL with dedicated returns space in its fulfillment centers. You’ll also want to inquire about automated scanning and other technologies that facilitate fast processing.
The right questions to ask a fulfillment center will help you arrive at the right partner
When outsourcing fulfillment services, remember you are not signing up for a date, but a long-term relationship. The wrong decision can severely damage your business. So, take your time, and get beyond the surface-level questions for which all providers will have pre-written answers.
While it’s important to know which questions to ask a fulfillment center, you must also understand the best way to ask them. Ask questions that challenge their knowledge and commitment, and that explore the limits of their capabilities.