With the rise of direct-to-consumer (D-to-C) brands, never before has it been so important to prepare and ship orders at a near perfect level in order to not only “wow” customers, but also keep them from poor shipping experiences that lead to negative reviews and press.
For those that outsource fulfillment, the shipping function is completely out of your control, so you must rely upon your partner to keep your reputation intact. Consistently monitoring the performance of your fulfillment center is imperative so that you can make any necessary adjustments if performance falters — up to and including moving to another provider. If your provider isn’t operating at the highest level, a swift change can keep your company from suffering devastating consequences.
Below is a look at some factors that cause businesses to leave their current fulfillment provider, as well as some steps you can take to ensure a smooth transition to a higher-quality fulfillment company if you find yourself in a situation where fulfillment services are suffering.
Key Reasons Why Companies Switch Fulfillment Providers
Companies rarely decide to switch fulfillment providers without a good reason. In some cases, a provider consistently fails to meet a company’s needs in a specific area. In other cases, a provider is deficient in multiple areas and there’s a “last straw” that causes a business owner to look for a new provider. Here are some of the key reasons why companies decide to leave their existing fulfillment provider and seek a new one:
- Poor performance issues, such as delayed deliveries, inaccurate items picked, and inventory discrepancies.
- Billing and invoice inaccuracies, such as abrupt pricing changes, incorrect shipping rates, and billing inconsistencies.
- Technology barriers, including reporting problems and/or incompatibility with your CRM or sales platform.
- Insufficient resources or the inability to meet the needs of your growing business.
- Poor customer service as illustrated by failure to communicate and a lack of consistent support when problems arise.
The Consequences of Staying With an Underperforming Fulfillment Provider
The consequences of remaining with an underperforming fulfillment company range from minor order inaccuracies to severe delays to permanently lost customers. And when a provider falls short in multiple areas, the outcome can be devastating to your industry reputation and your bottom line. Here are some of the specific consequences of remaining with a poor fulfillment provider:
- Financial Loss: Order cancellations, high expedited shipping costs, and free replacements can erode a company’s profit margin.
- Damaged Reputation: Poor online reviews and negative comments can cause long-term damage to your company’s credibility.
- Lost Customers: Nearly 60 percent of people won’t return to a company that fails to deliver proper service.
- Wasted Time: The time and human resources required to repair fulfillment problems can spiral out of control after multiple issues.
How to Make a Seamless Transition to a New Fulfillment Center
The path to a smooth transition begins by establishing your goals and expectations of your new provider. This involves outlining your requirements for orders, inventory and special services, in addition to your expectations regarding time frames and reporting. Be sure to summarize key points in writing to ensure that your new provider is aware of your needs and expectations.
The best fulfillment companies will collaborate on specific service-level agreements (SLAs) that will govern your entire relationship. Make sure that you “ink” these details in your fulfillment agreement (i.e., contract). After you and your new partner have agreed upon SLAs and what transpires when these SLAs aren’t met, it’s time to establish some procedures to help ensure that you receive what you need from your new provider. Here are some important points to cover:
- System integrations: Ensuring that your new provider can successfully integrate with your CRM or sales platform is critical.
- Shipping schedules: Clarify your goals regarding shipping and delivery time frames to make sure your new provider can meet them.
- Key points of contact: Make sure you know who will serve as your primary point of contact and how you can best reach that individual.
- Meeting schedules: Determine how often you and your provider will meet, and which meetings will occur in person vs. conference call.
- Reporting frequency: Establish a reporting protocol that will enable you to plan monthly and quarterly progress reviews.
As you and your new provider work together to cover these points, make sure that you’ve taken measures to minimize disruption within your organization. For example, you should determine in advance how much product you’ll need to move to the new facility as you exhaust existing inventory with your previous 3PL.
The Single Greatest Key to a Successful Transition
Transitioning out of a bad fulfillment company is a necessity, especially if your existing provider lacks the resources to handle your orders quickly and accurately. However, the transition process isn’t always easy. The key to a successful transition is to ensure that your newly selected fulfillment provider is a perfect match for your company and its goals.