5 Key Components of Fulfillment Service Value

Naturally, price is important. But value is also important. If you pay a low price for lousy service, what value are you really getting? This is true in any field and e-commerce logistics is no exception.

Order fulfillment is one of the most important aspects of your business. While it's necessary to consider budget and try to keep overhead down, pricing is only one element to consider when evaluating the value of a fulfillment provider. Since this provider will be the last to touch your orders before they are sealed and shipped, it is essential to insist on high-quality service.

Any third-party logistics provider (3PL) can pack a box. But there are many other details to consider, such as speed, packaging and accuracy. How fast do they fill orders? Even a day's delay is a big deal to many of today's e-commerce customers.
 

Fulfillment Report Card

Consider these points to score your 3PL. Keep consumer satisfaction in mind, as well as budget and operational efficiency.
 

Communication

How easy is it to reach a representative by phone? Email? Do they allow special handling or do you hit a wall once something is already in the system? The need for contact varies a lot from one business to another, but the option needs to be there, regardless of how often you need it. Sprocket Express emphasizes personal customer service and flexibility as an important component of value.

Speed

Expectations have accelerated over recent years and it is no longer acceptable to have a noticeable lag time between receiving an order and shipping it. The top 3PLs process orders within 24 hours. Usually there is a cutoff time when orders are harvested for the day's shipping. The later the cutoff, the more orders ship same day. This becomes particulary important for expedited shipping methods and on Monday and Friday. For example, if an order for next day air is placed on Friday morning and it doesn't ship until Monday evening, that may be perceived as a delay. Ideally, the cutoff time will be late morning to allow packaging and shipping in the afternoon, while still shipping many orders the same day.

During peak times, such as holiday weekends, the delivery lead time may change as the warehouse staff are hit with increased volumes. It is worth finding out whether your provider uses seasonal staffing and to keep them informed about promotions or forecasted sales spikes.

Presentation

Is the packaging neat and tidy? The end package must look presentable. This might seem like a given, but one of our clients left their previous fulfillment service because customers were complaining that their orders showed up in old newspaper and repurposed cartons from other products.

Technology

There is a range of client portal services. Ideally, you'll want to use a web-based portal so that you can access your information at any time from anywhere. Order and inventory detail should be self-serve so that you can see all of the details without contacting the warehouse. If the system is proprietary, find out whether they maintain regular support and whether they use encryption or other security measures. A good quality portal will rarely experience any downtime, but will make upgrades on a development server instead.

Accuracy

In a time when every second counts, there is no room for shipping error. The best fulfillment centers are at least 99% accurate, regardless of whether automation is involved in the picking process. In the event of errors, there should be a clear agreement and process in place.

Some services offer real-time inventory details, but it is not often that the results are truly real-time. And that's ok. When your orders are picked, inventory will temporarily be in limbo. It's not in stock, but it hasn't left the building and the order is still not fully processed. It is acceptable to update inventory several times during the day (after orders are harvested, once they are processed, and when they've left the building). You still get a clear picture of the movements and an accurate inventory count. What is not acceptable, is inventory that isn't updated at least once a day.

Accuracy goes beyond access to the numbers. Periodically, your fulfillment provider should perform a “cycle-count” or a handcount of every SKU. They should compare the results to the expected result according to the database. If there are discrepancies, the warehouse should investigate prior to sending you the results. When you receive the count, how well does it match your online shop records or accounting records? The number of adjustments needed, as well as the magnitude and regularity of these adjustments affect the value of service.

Assessment

Take our easy quiz to see how well your provider scores on service value. When you're done, check their rating in our score guide below.

Scoring

20-24 points Maverick Provider
This fulfillment provider is performing extremely well. Their service value is high. Good choice!

15-20 points Solid Partner
This fulfillment provider is doing a good job. Their service value is very good. Try talking to your provider about areas for improvement. Make sure expectations are clear on both sides.

0-14 points Ouch
It may be time to find a new fulfillment provider. Here's how to pick a good one.
 

What Next?

If you are looking for your first fulfillment provider, keep these aspects in mind as you choose your partner. Predicting issues ahead of time can be of great help when you weigh the value of each candidate.

If you already have fulfillment service, how did your provider do? If you aren't satisfied with their value, it may be time to transition. Here are three reasons to find a new fulfillment partner.
 

More Resources

Pricing is not one-size-fits-all when it comes to fulfillment and logistics. Here's how to get fair pricing.

Moving your eCommerce fulfillment operation to a third-party warehouse does not have to be a painful process. Whether you have outgrown your in-house capabilities or have chosen to switch from one fulfillment service to another, good planning is good protection. Here are some points to consider before, during and after the transition.