If you’re wondering how to evaluate your current fulfillment partner, then let us be the first to congratulate you on your success. It isn’t easy growing an e-commerce business to the coveted point where your fulfillment operations are now too small for the size and scale of your business.
In this article you’ll learn how to evaluate your current fulfillment partner and what to look for when looking for a new one.
What is a Fulfillment Partner
A fulfillment partner is a third-party logistics provider (3PL) or 4PL who offers inventory, order processing, and shipping services to other businesses. To run an effective fulfillment program, managers need to regularly analyze their fulfillment partners and search for ways to optimize the fulfillment process. It’s not the easiest thing to do but, fortunately, there are performance metrics that make the evaluation process less draining.
How to Measure Fulfillment Partner Performance
As with any business partner or vendor, fulfillment partner performance is measured against metrics and key performance indicators (KPIs) such as:
- Customer Satisfaction Level
- Average Units per Order
- Average Lines per Order
- Order Shipping Time
- Delivery Lead Time
- Rate of Return and Process
- Inventory Accuracy
- Inventory Turnover
- Cost per Order
- Customer Retention Rate
- Fulfillment Accuracy Rate
Though order fulfillment metrics are essential components for improving the fulfillment process and controlling spending, they are not the only way to evaluate a fulfillment partner. You must also consider flexibility, scalability and the support they can provide to your customers.
What are Your Fulfillment Needs
Before we go any further, it’s necessary to state that there is no “one-size-fits-all” fulfillment partner for every business. No two businesses are exactly alike and neither are the fulfillment partners that cater to them.
Therefore, the value of your fulfillment partner depends entirely on how well you understand your business. As such, the best way to evaluate your current or potential fulfillment partner is to evaluate your business and determine what you need from a fulfillment partner to grow, scale, and meet customer demand.
What are the daily; weekly; monthly and yearly demands of your business? Can your current fulfillment partner keep up with your current volume? Does your volume meet your potential fulfillment partners minimum requirements? Without answers to these questions, you can’t possibly determine whether or not one fulfillment partner is better for your business than another.
What to Consider When Evaluating/Choosing a Fulfillment Provider
Once you’ve determined your fulfillment needs, you can move on to evaluating your current and/or potential fulfillment partner to see if they meet them. Here are the six key factors to consider when evaluating and/or choosing a fulfillment provider.
As an e-commerce business, you need to know where your inventory is and, most importantly, when it will arrive at its destination. Your fulfillment partner should not only be able to readily provide you with that information, they should be able to do it when and wherever you need it.
Fortunately, most fulfillment partners now offer 24/7 support and an online management system that will automatically connect to your current fulfillment and order management software. That capability also enables you to monitor the average time an order spends in transit and the exact transportation cost for each package you ship.
Multiple Shipping Options
When evaluating current and potential fulfillment partners, pay attention to their carriers and the range of shipping options they bring to the table. The more shipping options a fulfillment partner can provide, the better. In fact, one of the biggest advantages of working with a 3PL is their negotiated shipping rates. You pay less for their service, which means customers can pay less for yours.
Data, Customer Intelligence, and Analytics
Knowledge is power. The more you know about your fulfillment operations, the better off your operation will be. Since you’ve chosen to outsource to a fulfillment partner, the only information you have on the success of said operation is the data your fulfillment partner provides you.
When evaluating current and potential fulfillment partners, be sure to ask if they collect and track a variety of shipment metrics and if they have a better system for aggregating and verifying the data you collect.
Customer support is absolutely essential to evaluating your fulfillment partner. If they can’t support your customers, then why are you working with them? Things are bound to go wrong eventually and when they do, you want a fulfillment partner who will not only remedy the situation but treat your customers with the support, dignity and respect they deserve.
Remember to test how quickly different fulfillment companies respond to your questions via various channels, as well as how satisfied you are with their answers. If it’s a frustrating process for you, it’s going to be doubly frustrating for your customer.
Location and Network
Almost as important as customer support is network and location. A fulfillment partner in California will never be able to service your customers in Washington as a fulfillment partner in Washington.
Evaluate your fulfillment partners network. Where are their fulfillment centers? How many warehouses do they have in your service area? Is their service area anywhere near your customers? The closer your fulfillment partners network is to your customers, the lower the shipping costs and transit time will be.
Warehouse Management System (WMS)
A good fulfillment warehouse is going to have warehouse management software that is not only sophisticated and loaded with functionality, but also intuitive, innovative and easy to use. When evaluating your fulfillment warehouse, be sure to look into and understand the capabilities of their WMS and how it impacts your ability to meet customer demand and deliver an exceptional customer experience.
Review Your Fulfillment Needs With Flowspace
If you’ve made it this far, then you’re either satisfied with your current fulfillment warehouse’s performance or you’re in the market for a new one. With a nationwide network of 1000+ warehouses and fulfillment centers, Flowspace is the best choice you can make for your e-commerce business.
Different from traditional 3PLs, we enable online retailers with the flexibility they need to gain a strategic advantage over their competition and ensure their customers get what they want when they want it.