Guide

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Choosing a 3PL

How to Manage Your 3PL Relationship

Outsourcing warehousing doesn't end the work, it changes it. What a good 3PL relationship needs from the customer side, and what to fix when one isn't performing.

Outsourcing your warehousing takes a lot of work off your plate. It doesn't take all of it. The operation still needs managing, just from a different seat.

The relationships that work well aren't the ones where the customer disappears and hopes for the best. They're the ones where the 3PL has a clear picture of the business it's supporting, and finds out about changes before they show up on the dock. Here's what that looks like in practice, and what to fix if your current arrangement isn't delivering.

Put the expectations in writing at the start

Not a service level agreement full of language nobody reads. A working document that says what has to happen.

Receiving requirements and what counts as a complete inbound. Order cutoff times and turnaround. Inventory accuracy targets and how they're measured. What reporting you get and how often. Any handling your product needs that isn't obvious from looking at it.

Then the part most people skip: what happens when something goes wrong. Who gets called, how fast, and what the warehouse is expected to do before it calls you. Sorting that out on a Tuesday afternoon with a load sitting on the dock is the expensive version.

Tell them what's coming

This is the single highest-value thing a customer can do, and it costs nothing.

A promotion that triples outbound volume for three weeks. Four containers landing in the same week. A new retail account with its own routing guide. Twenty new SKUs. A seasonal ramp that starts earlier this year than last.

Every one of those is manageable with notice and painful without it. Warehouses run on labor planning, and labor gets scheduled in advance. A week's warning is the difference between staffing up and scrambling. Tell your 3PL in the same meeting where you decide it, not in the week it happens.

Set a cadence and keep it

The single mechanism that makes everything else on this list actually happen is a standing call. Monthly is enough for most accounts, weekly during a ramp.

It doesn't need an agenda beyond three things: what happened last month in the numbers, what's coming next month, and anything either side is worried about. Twenty minutes. The value isn't in any one call, it's that problems surface while they're still small, and that the warehouse hears about your business regularly rather than only when something breaks.

Name the owner on each side too. One person at your company and one at the warehouse who both know the account and can make decisions about it. Relationships that run through whoever happens to pick up the phone are the ones that drift.

Measure a few things, consistently

Pick the handful of numbers that reflect how your operation actually runs. For most accounts that's inventory accuracy, order accuracy, on-time outbound, receiving turnaround, and damage rate.

Then look at the trend rather than the month. A single bad number usually has an explanation. The same number sliding for three months in a row is telling you something, and it's much easier to fix at month three than at month nine.

A warehouse that tracks its own performance will have these ready without being asked. One that has to go build a report every time you ask is telling you something too.

Keep the procedures current

Your business changes and the written procedures usually don't. New SKUs with different handling. A packaging change. A retailer that updated its routing guide. A labeling requirement nobody passed along.

Whatever governs how your product gets handled should be a live document, updated when things change and shared with the people doing the work. The value shows up the week your regular supervisor is out and somebody else has to run the account correctly from what's written down.

Use what they can see

Your 3PL handles your inventory every day. That's a vantage point you don't have from your side of the relationship.

They know which SKUs move and which ones have been sitting since spring. They know which of your customers reject shipments and why. They know that a case pack change would save you a meaningful amount of handling, or that your slowest-moving items are occupying your best pick locations.

Most of that never gets raised, because nobody asks and it isn't anyone's job to volunteer it. Ask. The standing call is the place for it, and the answers are usually free.

What this should feel like

The point of outsourcing logistics isn't to stop thinking about your warehouse. It's to stop running one, while still knowing what's happening to your product and trusting the people handling it.

If you're spending more time managing your 3PL than you spent managing your own operation, something is wrong with the arrangement and it's worth naming out loud. A good provider would rather hear it than lose the account.

At Clark we work directly with our customers on how their operations run, and adjust as those requirements change. Most of our long-term accounts look nothing like they did when they started.

Talk to Clark About Your Logistics Needs →