Having an optimized, well-defined order fulfillment workflow that minimizes time and labor costs and fosters business growth is crucial.
eCommerce businesses routinely outsource their order fulfillment operations to third-party logistics providers. Many 3PLs have the expertise to deliver optimized order fulfillment, but settling on a 3PL requires some thought and planning. Here are three common mistakes to avoid when you’re outsourcing your order fulfillment processes.
Mistake #1: Lack of Planning and Communication
As many as 80 percent of eCommerce businesses fail, due to factors ranging from lack of cash flow to bad planning and poor communication. Any business manager must put equal emphasis on every aspect of their business. You can’t rely solely on great products and good marketing. Back-end operations must also serve your business goals, with efficient order fulfillment forming part of your “backbone.”
Make sure your 3PL partner understands your business, and invest some time creating a solid working partnership. You need to be sure that your 3PL partner understands your goals and is able to meet your requirements.
If you don’t communicate your requirements and your goals with an order fulfillment specialist, you can negatively impact your supply chain management. This mistake can lead to problems like inventory software showing redundant product information or missed shipments for particular locations. Open communication will avoid confusion and disruption to order fulfillment.
Mistake #2: Not Assessing Service Provider’s Credibility
It is important to assess any outsourced provider’s credibility because your order fulfillment depends on their expertise. There are several ways to measure their credibility:
- Ask them to explain their range of services and how they perform various tasks. Knowing how they operate will help you decide if they can meet your requirements.
- Look for customer testimonials and recommendations, and ask if you can talk to current clients for their feedback.
- Ask what technology they use to fulfill orders and automate operations, particularly their inventory management, CRM and other order-related software integration.
Any credible provider will be proactive in these discussions and should demonstrate the ability to adapt to the ever-evolving nature of eCommerce. The provider should be agile enough to prevent any disruption to order fulfillment that might result from these changes. For example, if the company plans to change its own software, they should communicate that to you well in advance, and let you know how they will handle operations as they change their technology. Openness about their own operations and technology lends to their credibility.
Mistake #3: Looking for the Cheapest Services
Services come in different packages, and while “cost-effective” doesn’t mean ineffective, a low price tag should never be the deciding factor. In fact, companies that offer services at bare-minimum may later hit you with a hidden cost.
Similarly, a company that charges the most may not provide the best service for your requirements. If they deal mostly with enterprise clients, things may not work out for smaller companies. Once you know and can communicate your requirements, ask for quotes, and choose the provider that meets your needs within your budget.
These are the common mistakes business owners make when they outsource order fulfillment operations. Opt for the service provider that ensures transparency, incorporates flexible technology, quotes the optimal price, communicates openly and understands your business thoroughly.
About the Author
Nilam Oswal is Content Marketing Head at SoftwareSuggest and writes frequently about project management, HR, hotel management and other business management software.