Price is one of the primary considerations when you choose a fulfillment partner for your e-commerce business. However, the value of a partnership extends beyond price. Many companies today look for something a little deeper in their business relationships, taking into account factors such as sustainability, integrity and responsibility.
Performance is intimately connected to price. Everyone has stories of cheap appliances that quit in the first year or service providers with low rates and poor service. Since your third-party logistics provider (3PL) will be the last one to handle your products before shipping to the customer, it is essential to consider the real value of the service.
It is often more expensive to conduct business in a socially responsible manner. However, consumers and business owners alike prefer to support responsible companies. Quality employees are more attracted to companies like these and they tend to be more satisfied with their jobs, staying longer at the company.
CEO Dan Cence had a vision of creating good jobs for the local community and enhancing small business in Massachusetts. He founded Sprocket Express to support technical innovators from Harvard and MIT with an e-commerce/distribution platform to help them commercialize their start-ups. To fuel the business, he created jobs in the community and stayed local.
Within the supply chain, there are numerous ways to exhibit responsibility. For example, choosing environmentally sustainable sources of materials or services, supporting ethical causes via charity or offering recycling and other methods to reduce waste. “Green policies” have become a way to demonstrate a sense of responsibility and corporate ethics.
Investing in local real estate and infrastructure, whether re-purposing existing commercial space or building new, is a meaningful way that fulfillment companies can help restore communities. It can be difficult to fit modern fulfillment operations into existing spaces, so each logistics company must weigh the costs of building from scratch or retrofitting older real estate. Dan chose to establish his 3PL in a 40,000 sq. foot former jewelry manufacturing building in Plainville, Massachusetts.
Recent data suggests that energy use has not decreased in warehousing, despite intentions to improve efficiency. Large buildings account for over half of the energy usage in the field and small building consumption increased. Warehouses can pursue greater efficiency and reduce their carbon footprint with energy tracking and reduction strategies. This action indicates responsibility to the environment.
There are horror stories of the “brutal reality” for Amazon employees working in warehouses around the country. Their wages were just recently increased to $15/hour and many still consider this barely livable, but the real problems are the long hours and frequent medical emergencies. Warehouse workers are not traditionally paid high wages and many have to work multiple jobs to make ends meet.
Wages are one of the highest costs for fulfillment businesses and the cost of their service may reflect the level of compensation for their staff. New England has higher labor costs than many areas of the country, but businesses like Sprocket that pay a livable wage believe it is important to have value in the community and respect for employees. The bottom line is not the only indicator of a successful business.
Dan insists on providing quality health insurance benefits for Sprocket Express employees, even though it reduces profit margins. And he makes sure to have plenty of seasonal staff on hand to handle peak activity. At the same time, he has managed to keep minimums even lower than many competitors.
To grow, any business must take feedback from various sources-- employees, customers, surveys, market research-- and work continuously on improvements. Consider whether a fulfillment house uses third-party software to manage logistics. Those with proprietary systems can offer flexibility and customization.
The management team's experience will also greatly impact value. For example, with decades of fulfillment experience at a global level, many of the Sprocket team possess APICS certifications and have taught in the organization or presented papers at trade conferences.
A company that takes a socially responsible attitude can improve and maintain solid relationships with clients who are confident in the company. For many, it is no longer just about money.