3PL: How will you compete in 2024?

Customer Order Cycle

The average processing time from the point your customer receives an order and submits it to you through the time it takes you to ship it from your warehouse should be the most important KPI in your business.? Shipping orders complete or shipping orders accurately is also important but does your customer no justice if it ships late.? One of the single largest areas of improvement that a 3PL operation has the most control over is how long it takes a customer order to move through the warehouse operation.? Here is a statistic that your customers know all too well and one that you need to be familiar with: 69% of on-line shoppers will not come back to shop if their original order shipped late.?? Best in class today should be less than 3.8 hours from the time your customer receives an order through to the time it ships from your warehouse.? For those that argue with same day shipping, rethink it because this will be the main reason your customer moves to another 3PL. ?

Dock-to-Stock

The speed at which inbound inventory is made available for sale, impacts your customer’s direct profits.? It’s important for you to understand that 43% of consumers will go somewhere else if the product is out of stock or more importantly not available. 3PL’s make the mistake of overlooking their performance in receiving when they don’t realize that the quicker the inventory turns the more revenue in handling they produce. ??Don’t let storage revenues cloud your thinking. Best in class in this area is measured in lines received per hour per person.? If you’re doing 45 lines per hour per person, you’re ahead of all your competition.?

Order Fulfilment Rates

While the cost of labor will typically constitute about 65% of most facilities’ operating budgets, If you’ve taken a close look at your order fulfillment activity, you’ve probably come to the realization that more than 50% of your labor costs are buried in your pick, pack, and shipping operations.? Every 3PL needs to measure order fulfillment and shipping productivity in lines picked and shipped per hour per person. Performance in this arena will be affected by the type of commodity handled.? In general, if you are picking, packing, and shipping, on average, 70 lines per hour per person, you are considered Best in Class.? ???

Financial Analysis

The true performance measure of any 3PL organization at the end of the day, comes down to the bottom-line profitability.? The financial proficiency of any operation is centered around two crucial areas: Operating costs and Sales Revenues.? Many 3PL’s in the industry today don’t know their true costs and therefore are either selling there services too low or losing sales because they’re losing to the competition. ?Factors like uncontrolled labor costs or over spending can easily eat away at margin and make even the most lucrative services agreements virtually unprofitable. Tracking a few key metrics can help any 3PL business regain balance.?