Non Asset Based 3PL

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When it comes to non asset based 3PLs, assisting their clients with setting up a distribution center, it seems that their choice is limited to only the companies that the 3PL has relations with.

There is no denying that relationship is important in this business, but in today's environment with thousands of quality 3PLs out there, we cannot simply count them out due to lack of relationship. When a non asset based 3PL is trusted by his/her client to put together the complete network of services, it is fair to expect that all possibilities will be considered with the end goal being, putting together the most cost efficient network. Which means new relationships should be forged, where none existed previously.

The capacity of a asset based 3PL changes from day to day. There will be highs and lows in the area of space and services offered. Also, there will be new 3PLs actively seeking business and giving huge incentives to join in. Non asset based 3PL should be aware of such offering and factor them in, when assisting their clients. They should be aware of 3PLs with excess space in a new distribution center, which the 3PL is looking to fill up asap.

One of the main reasons the non asset based 3PLs are restricted to using resources from their personal contacts and not seeking out new 3PLs, is that the communication between asset based 3PL and a non asset based 3PL is missing. There is a huge void that needs to be filled in, in the 3PL industry where requirements change every day, the offerings of space and service by asset based 3PLs also change on a regular basis. The collection of such information should be an ongoing process and should happen even outside the person to person networking opportunities that do exist.

If there existed a portal where asset based 3PLs could advertise availability and special incentives on fulfillment and storage services, this would help both the seeker and the provider.

We at SpaceSpecials.com is one and only such portal where asset based 3PLs can list their availabilities. At the same time the non asset based 3PLs can check out those listings and post any specific requirements of their own. We are convinced that doing so will be beneficial for all.

Once again communication among 3PLs is the key to progress and that is what we are all about.

Order Fulfillment Centers in a Nut Shell

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Introduction

All retail and wholesale businesses at some juncture will contemplate outsourcing warehousing services to an order fulfillment center. The order fulfillment centers are also referred to as 3PL (third party logistics) warehouses. They are mostly privately owned independent entities.

The services they offer are referred to by different names such as Public Warehousing, Fulfillment warehousing, Storage Warehousing, Warehousing and Storage, Warehousing Distribution, Inventory Fulfillment, E-commerce Fulfillment etc.



Services provided by Order Fulfillment Centers

Typically an Order Fulfillment Center will offer the following services:

Warehousing and Storage

First and foremost the Order Fulfillment Center will offer warehousing and storage services. Most 3PL have a sophisticated array of equipment to compliment their warehouse storage services. This equipment will include conveyor belts, forklifts, racks, docking doors, scanners etc. All the operations in a warehouse are tied together with the help of a Warehouse Management System (WMS).

The customer utilizing the services of the 3PL will ship their inventory from their warehouse to the 3PL warehouse. 3PL warehouse will also continue to receive new inventory or returns on an ongoing basis.

In warehousing distribution, how the items are stored in the warehouse, plays an important role. For certain types of items first in first out is the norm whereas for some other items such as perishables first in last out is the norm. This is to ensure that no perishable good sits on the aisles longer then it has too.

Order Taking

An order fulfillment center will typically utilize a web based application, where the customer will enter the orders online. Once the order has been received by the order fulfillment center, it will then process the order. Orders can also be conveyed to the order fulfillment center using electronic feeds using files in many different (EDI) formats. These formats are pre agreed upon by both parties. The transmission of data can be once a day or real time.

Order Fulfillment

Once the order has been received, following key pieces of information is required to process the order:

SKU that uniquely identifies the item
Customer Information
Quantity
Shipping Method
Other Miscellaneous handling instructions

Based on the SKU, one of the key operations the fulfillment center provides is to be able to locate the item. How the items are stored in a fulfillment center is no easy feat. Storage of items is ideally done based on fast moving items closer to the docks and slower moving items further away. As items continue to ship out, the front aisles continue to get replenished with the fast moving items.


Shipping and Handling

Once the item has been plucked from the shelf and is ready to be shipped, two key components are considered: Packaging and
Shipping. If the item has to be shipped individually to the consumer, it is typically packaged and then shipped the same day or using the next day shipping service. UPS, Federal Expresss are typically used for this type of service. Since, the number of shipment volume is significant, these companies offer, order fulfillment centers, heavily discounted prices. This is an important saving that is passed on to the client.

In some cases items may be getting shipped in bulk, for example to a retail outfit. In such cases, the key component is consolidation. As the weight of the shipment can be considerable, services such as UPS and Fedex is not always cost effective. The distribution warehouse will then look to consolidate shipments using a private carrier. Shipments which constitute less than truck load (LTL) are consolidated with other shipments going in the same direction, to realize better savings.

Processing Returns

Last but not the least is the capability the fulfillment center should provide in the area of handling returns. Returns require more attention to details then any other aspect of fulfillment. Return requires manual inspection of the item. Notes on the condition of the item, needs to be entered. The item will be returned to a separate area that will be earmarked for return goods. These goods will eventually be sent backed to the manufacturer or the retailer may choose to take other actions.

Selecting a Order Fulfillment Center

Three types of businesses typically look to outsource warehousing and storage operations:

E-Commerce Retailers
Wholesale Distributors / Importers
Manufacturers

Small Medium Sized Companies

If you are a small or medium sized operation (say with the net revenue of three million or less), you could search for order fulfillment companies online or go by word of mouth.

When selecting the order fulfillment company keep in mind the following selection criteria:

1. Product specialization
2. Location of the warehouses as per the proximity to your customers
3. Size of the warehouses
4. Order Management System and Reporting
5. Costs

Large Companies

If you are a large wholesaler, distributor or manufacturer and you are looking to outsource the warehousing and fulfillment operations, your best bet would be to engage a non asset based 3PL to setup your operations or engage a consultant to understand your requirements and locate a suitable asset based 3PL partner.

What are we marketing here ?

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Are we marketing "Warehousing" or "Order Fulfillment" ?

It is time to figure out what exactly are we marketing when we say "Marketing Order Fulfillment Services". It is important to establish as to what words will seekers of such services be typing in the search engines when all they want is a warehouse company who can undertake shipping and handling for them.



Some of the terms that have been thrown out there are: 3PL Warehousing, Order Fulfillment, Distribution and Warehousing, e-Fulfillment, Public Warehousing, Warehouse Services and so on.



It is important that the companies offering all the above services agree on a key term that relates to the market segment they are targeting. In my opinion the market segment is broken up as follows:

• 3PL Warehousing : Stands for third party logistics warehousing. This term is most appropriately used when you need a finer control over trucking, shipping and warehousing. For large companies which need more control over their logistics operation, 3PL warehousing will actually translate into getting into a long term contract with a warehousing company. The warehousing company will in return customize their services as per the needs of client. The customization can entail using customized warehouse management system, having dedicated floor space and having the operations customized as per the client's requirement. This arrangement is also know as contract warehousing. The main difference here is that such an arrangment requires a long time commitment from the client.
  
  Usage: Used mostly in context of providing warehousing services to very large customers, looking for customized services and willing to work on a long term basis.
  
  Synonyms: Warehousing and Distribution, Contract Warehousing
  


• Order Fulfillment : Order fulfillment, my personal favourite, is most often used when working with a e-commerce company. Order fulfillment should entail the full cycle of receiving orders online and also processing returns. The client in most cases will be ambiguous of how its being done internally. The only aspect revealed to the client is the cost structure of price for storage, picking and handling and shipping. Also, returns are priced seperately. Once the client agrees on the price structure, behind the scenes a lot of consolidation is done by the fulfillment company. Therefore, many different companies are sharing the same warehouse resources.
  
  Usage: Used mostly in context of ecommerce companies and small to medium sized wholesale distributors.
  
  Synonyms: e-Commerce Fulfillment, Fulfillment House, Public Warehousing

Who are our customers ?

In my opinion there are only two sectors 3PL warehouses serve.

1. Large companies looking to outsource their warehousing. These companies typically are manufacturers or large wholesale distributors. They can also be large retail chains. Go with the term 3PL warehousing.
   


2. Small and Medium sized e-retailers and wholesale distributors. These are the guys who need back to back order fulfillment services. This is the market that will see double digit growth in the coming years. Go with the term Order Fulfillment.

Therefore when marketing the services your warehouse provides, lets keep this distinction in mind.