| Q: I need a local fulfillment operation in Canada to | | | | 3PL partnership requires a significant amount of time, |
| effectively grow my business there. How would I | | | | effort, and follow-up by the client company. You |
| proceed to develop an external fulfillment operation in | | | | need to make clear that you have relinquished only |
| Canada? | | | | the physical handling of your product to the 3PL, not |
| A: First and foremost, you have to develop a | | | | the responsibility to manage your business. |
| business model for the designated selling area. This is | | | | Identify key client contacts and decision-makers who |
| a three- to five-year strategic plan comprised of | | | | will be issuing direction to the 3PL. The 3PL provider |
| historical data and a projected forecast. A few pieces | | | | needs to clearly understand who will provide direction |
| to the model are: | | | | and who is responsible for resolving problems. |
| Three to five years projected sales as | | | | Remember that the 3PL is proud of how it manages |
| orders, detailed to a weekly/daily (where | | | | its business. Use the same consideration |
| appropriate) plan | | | | communicating with the 3PL that you would extend |
| Average units and lines per order shipped | | | | to your most valued associates inside your own |
| Seasonal or peak volume increases as | | | | company. Never ignore issues or problems, but be |
| orders shipped, average lines per order, average units | | | | firm and respectful in resolving them. The 3PL is |
| per line, average cartons per order | | | | normally quite aware of who is paying the bills and |
| Method of shipment and percentage of | | | | who owns the inventory. The 3PL exists to serve; |
| volume by type for purchase orders (small parcel, | | | | you should be a gracious ruler. |
| LTL, T/L, container) | | | | Communicate daily with 3PL management and visit |
| Preferred method(s) of shipping by | | | | the site as frequently as travel restrictions permit. |
| percent of total volume | | | | Discuss the basics of the previous day's |
| Average weight per order shipped | | | | operations-receiving, shipping, inventory |
| Second, identify where your projected concentration | | | | management-and always inquire what you can do to |
| of sales will be and determine the most | | | | assist them to achieve their goals and objectives. If |
| advantageous physical location within the new selling | | | | possible, visit monthly, but no less than quarterly. This |
| area for a fulfillment operation for your projected | | | | sort of relationship can become a classic case of "out |
| business model. Site selection is critical to managing | | | | of sight, out of mind." |
| shipping costs and to assuring there is an adequate | | | | The client has to be diligent in managing the 3PL |
| labor pool. | | | | through daily reporting. You are now managing a |
| Third, decide whether you should handle your own | | | | remote location, and therefore your best source of |
| fulfillment or contract a third-party logistics provider. | | | | information is the 3PL's daily reporting and invoices. |
| You must identify any tax implications related to | | | | This is no different than managing your own |
| opening a new business as an employer. Normally the | | | | operation. Master the information reporting so you |
| least-cost method of establishing a new operation is | | | | can identify trends and immediately spot issues as |
| with a 3PL provider. Unless tax concessions for new | | | | they appear. |
| employers are significant and long-term, it will likely be | | | | Inventory management is the most important |
| more economical to operate for the first two to | | | | reporting in managing a 3PL. The client has to know |
| three years with a third party. You can use the | | | | where to look for issues such as lost or damaged |
| Internet to identify potential 3PLs. However, we | | | | inventory, out-of-stock, and when the inventory |
| definitely recommend a visit to prospective partners | | | | records indicate adequate supply. These are |
| as a preliminary to any further conversation. It is | | | | indications of performance concerns requiring the |
| much better to have a visual image later as you | | | | client's follow-up and resolution. |
| review respective proposals. | | | | Receiving performance reports and inbound |
| Third-party fulfillment | | | | scheduling are next in importance for daily follow-up. |
| If you do decide to explore contracting with a 3PL, | | | | The client has to know if there are vendor delivery |
| you must develop a request for proposal. The | | | | problems or 3PL receiving issues that will affect the |
| primary content of the RFP is your business model. | | | | customer service level. This is also where the daily |
| The more accurate the information you supply about | | | | phone follow-up will indicate any "carry-over" receiving |
| your business, the more effective the proposals from | | | | issues on a purchase order. |
| 3PLs will be. Send the RFP, with a clear deadline, to | | | | Normal daily shipping follow-up is important, but the |
| three to six 3PLs that you believe are stable, | | | | most important point is to know what did not ship. |
| industry-proven, and can effectively handle the | | | | Returns reporting is crucial not only to identifying |
| volume from your business. | | | | customers' satisfaction with your product, but also to |
| It is important to identify clearly every statement of | | | | discovering any 3PL -related performance issues. |
| what the candidates propose to do and not to do, | | | | Detailed reason code reporting is imperative, and |
| and every requirement and cost within a proposal. | | | | cumulative graphing is valuable in discussions with the |
| Establish a spreadsheet so you can compare | | | | 3PL. |
| proposals and details. If your team does not possess | | | | Growing a business by expanding operations to |
| the experience to review and negotiate agreements, | | | | Canada is an exciting and challenging prospect. If you |
| pursue the services of a consultant. Next you have | | | | take the time to lay the groundwork by developing a |
| to negotiate all the standards of work and contract | | | | comprehensive business model and researching site |
| terms to assure that the 3PL can actually provide the | | | | selection and possible 3PL involvement carefully, you |
| service you expect. | | | | will significantly reduce the challenges and increase |
| Your work is not complete even after you have | | | | your chances of success. |
| negotiated an agreement. Developing a successful | | | | |