3PL Onboarding Transition Plan

Onboarding! We all have to do it when we bring in a new partner or software vendor.

A 3PL requires even more detail.

Many brands think the hard work is the RFP (Request for Proposal). But you’re only part way to the finish line and to get this right, to set up for success, it’s not as easy as just sending in your inventory and then calling it a day. That’s a recipe for failure for both the brand and the warehouse.

The devil is in the details. I hate that phrase, it should be "The success is in the details".

If your warehouse doesn’t already have a detailed onboarding checklist, make sure you have your own. (We have one, email us for a copy).

Start with the big picture:

Who are the stakeholders on this? Work together to answer the following questions.

Is the questionnaire from the 3PL complete? They likely had one that they needed you to answer so they can plan for space, staffing and any special requirements you had for them.

1. Has the contract been fully executed?
2. When is the official project start?
3. Agreed to go-live date?
4. What integrations are included in the contract?
5. What’s the schedule for sending in first inventory?

Moving in together.

The brand and the 3PL can both be set up for success on this, with just a little organization and a lot of communication.

FIRST PRIORITY – make sure everyone understands the timeline. Both sides need to contribute to this.

• How long will it take to send in inventory?
• Is your existing 3PL relationship a good one? Are you sending straight from manufacturing or distribution. It’s much easier then. But sadly, that’s more of a rare situation.
• Often the existing 3PL relationship has degraded and it’s going to be more challenging to get your old inventory out. Make sure to build time for this into the schedule.
• How long will it take the warehouse to receive and shelve the first shipment? (hint: if it’s sent in mixed pallets, messy from previous 3PL or even floor loaded, it’s going to take longer for the warehouse to even figure out what you’ve sent.)
• How long will it take to get the integrations to sales, finance and ERP (Enterprise Resource Planning like NetSuite, Acumatica, etc) channels set up?
• Is this new warehouse sending ALL of your orders or is there another one? How are order routing rules being handled?
• Who is in charge of following all these details on both sides of the relationship? Assign a project manager internally who is in charge of checking off all the boxes.
• Are you using EDI? (Electronic Data Interchange). Make sure your existing provider and trading partners know you’re making a change. If your old warehouse was running your EDI for you, you’re going to need your own relationship to gain more control and make it easier to move or make impactful decisions.

Bottom line here is that these pieces all take time, attention to detail and patience. It took you months to make the decision for what 3PL you wanted, make sure you take the time to get set up correctly so that everyone wins.

3PL + Brand, fresh start.

Does everyone on both teams know what SLA’s (Service Level Agreements) have been agreed to? What pricing was in the contract?

Those details often happen at the C level and the people in charge of making it happen have no idea. This can cause friction in the relationship. It’s our goal to “stay married” after all the hard work of the matchup, the dating and the pre-nup. Communication with both teams on contract terms is critical to reducing that friction.

Make sure stakeholders have a copy of the agreement. The person internally in charge of the transition document should be able to cut and paste the important sections to publish for visibility across the board. Share the document with everyone that needs to be aware of all the details.

This is a living, breathing document that will last beyond the onboarding stage. It’s the reference point from which all the action starts.

The screenshot here is an example of the first section of the transition template. It lays out all those contract, SLA and pricing details along with who is responsible for each item and the status of where each one is.

The transition plan needs to be tightly monitored to make sure everything gets done.

Item master –

The warehouse needs a list of all SKU’s (Stock Keeping Units) including dimensions, weight, properties like fragile, cold chain or hazmat. Do you have items overseen by the FDA? The warehouse is responsible to keep up their certification so they need to know exactly what you have. Include the UPC (Universal Product) barcodes and a photo of the item and the packaging is ideal so the warehouse staff can sort it as it comes in. If you’re not already using a super detailed item master, please email us, we have a template you can use.

B2B –

Are you selling to retailers? Are orders coming from a marketplace, through EDI, through a wholesale page on your Shopify? Tell the warehouse EVERYTHING. There is no detail too small.

Packaging –

Do you have special, super fancy boxes you are sending in for them to track as inventory? Make sure that’s on the item master too.

Pricing lists –

Domestic and/or international. This is your retail and wholesale pricing, not your item costs. Why do they need this? Because if you want this information in the WMS (Warehouse Management System) for inventory or cogs control, it has to be entered. For international shipments, it has to be on the commercial invoices.

Shipping methods –

What have you offered to your B2B (Business/Retail) and D2C (Consumer) customers? What is programmed in to your sales channels? Make sure the warehouse is aware so they can map the WMS to your channels and set up the carrier accounts with you.

Sales channels –

List them out in detail. Make sure the integration team at the warehouse knows exactly what you want connected and work with them on the timeline for implementation.

There is literally no detail the warehouse doesn’t need – remember, they’re your partner not your vendor. Set both of you up for success by being fully transparent.

• Selling B2B? Provide your retailer lists. The warehouse needs to know who they’re commonly shipping to. Often there are vendor guide requirements they need on this list too.
• Moving from a previous 3PL? Make sure if there were any backorder or “future shipment” orders that the list gets transferred to the new 3PL for input into the WMS.
• Historical sales data – Analytics are KING! If the warehouse knows what usually happens for your brand, they can properly be ready and staff for expected order spikes.
• SKU priority lists for racking. Make sure they know which SKUs are moving quickly so they can position those closer to the packing stations. This is often called “flow racking”. Every bit of efficiency will drive their costs down and keep yours from escalating.
• Promotional calendar – have the sales & marketing department provide the schedule of what’s happening and when. Again, so the warehouse is ready with packaging and staff to handle potential spikes.
• Forecast by SKU – This helps with warehouse planning, space planning and inventory management. This is a critical piece to share.
• BOMs (Bill of Materials) – make sure your warehouse knows the contents of your products. They may need to take special care with some as a result so having that information up front helps them plan.
• Purchase Orders – let them know what’s on order so they can plan space.
• Vendor lists – let them know who all your vendors are so they can communicate when needed. This goes for your product vendors so receipt can be organized but also your software vendors. Any issues in integration or data flow can be handled by those with the expertise for it, freeing you up to do what you do best, sell your products.
• Inbound stock report – let them know what’s coming and when. The more time and detail you give them to plan, the better off everyone will be.

Reporting, analytics and details. Visibility will move you as an operator from being reactive to proactive.

Make sure everyone is clear on expectations for reporting. Some WMS systems have a lot of reports built-in, ask the warehouse for a list of what your options are. Then figure out which reports are important to you and the cadence of when you receive them as well as how they’re transmitted.

These can include reports on –

? Inventory (daily, weekly, monthly, etc)

? Packages shipped out (daily, weekly, monthly)

? How many days it’s taking on average to ship out D2C orders

? How many days on average that it’s taking to ship out B2B orders

? Lot tracking, expiration date report

? Returns report

Next up is SYSTEMS.

Yep. we’re talking about tech now. Make sure both parties know what is available for tech stack and what is required. There is no replacement for the training that comes from actually using a tech tool.

1?? Make sure the brand knows how to use the WMS, how to read the various menus and tools available to them.

2?? If a 3rd party order operations tool is involved (like Pipe17), make sure that parties at both the warehouse and the brand know exactly how it works, how to get support and how to set things up.

3?? Is EDI in play? Everyone needs to know what the expectations are. What provider is being used? Who is doing setup and testing? Who is responsible for monitoring, ASN’s and future ship dates?

4?? Is the brand using a freight tracking system? Does the warehouse require you use their freight partners so they know when something is inbound?

5?? Is a Supply Chain Management solution in place? (Check out Unity SCM if you don’t use one now).

6?? Any other tools? Inventory management, ERP, etc? Clear and consistent planning will make all the difference here.

Integration:

Let’s talk integration! All the tools in the world are useless unless you’re connecting them. Time to stop being scrappy and play like the big kids.

Make sure everyone knows who is in charge of each step of the process, what 3rd parties are involved and all the mappings and tests to make sure it’s all tight before you go live.

• WMS/3PL to sales channels
• WMS/3PL to inventory management tools
• WMS/3PL to accounting channels
• WMS/3PL to EDI provider

If you’re selling B2B and/or using EDI, make sure that the 3PL has all the vendor guides on hand. These can be voluminous and they don’t need every single page. They just need the requirements that pertain to them. How units must be grouped, packaged and shipped. Having the warehouse sign off on all these details is the best way to be aligned AND to prevent deductions and chargebacks from retailers.

Clear, consistent communication is the key to making this smoother once you get started. Remember, this is a partnership so working together will make both parties more successful.

How dedicated is your ops team + new warehouse team to getting the account set up right?

Are we done yet? NOPE. Still more to do to get things set up properly.

Shipping:

When a brand is starting with a new 3PL, a big topic of conversation is always about shipping costs.

When the contract was negotiated you should have discussed whether you were going to use your own carrier accounts or use the commercial shipping accounts from the 3PL.

• Item #1 is to lay out a list of all the carriers being offered on the sales channels, because all of those will need to be mapped to the Brand’s account with the 3PL.
• Item #2 – Now is a great time to look at your numbers and see if anything needs to be changed. You’ve got options that will save your team time and your company money.

A few options to consider:

Shipware has a program for helping out shippers in the e-commerce space with LTL and small parcel cost efficiencies.

Ross Brenner‘s team at ProfitTrust does a great job of auditing carrier contracts and finding all the areas you’re paying too much.

Sifted has a pretty cool logistics intelligence tool that gives you a score on things like your box sizes, your rates or your zones and can help identify those hidden costs too. Caleb Nelson and I did a podcast together on finding a new 3PL and they have some great features to their tool.

If you’re a 3PL reading this, everyone on the list above can help you too, not just your brands. Everyone can benefit from carrier review!

**Note for 3PLs, make sure you have an analytics tool on board so you are charging the right client for the right orders, and communicating with the brand so they can make sure their sales channels are picking up the right shipping costs from customers as well.

There are so many places that e-comm Ops bleeds money, shipping doesn’t have to be one of them.

Packing:

I recently received a dirty box that came for an order I placed. I’m not talking about the exterior packaging, that could come from transit. I’m talking about the interior product box. It wasn’t just dirty, it was filthy. A simple wipe with a rag at the warehouse would have made a much better impression on me. A consumer doesn’t ever think about the warehouse, they think about the brand. So a poorly packed order is going to make a brand look really, really bad.

Package sizing. An order packed in a box that is too big is going to cost the brand extra shipping costs (and likely lose money on the order).

Providing your warehouse with an SOP for packing your products is key. Lay out exactly which SKU goes in which size box if you’re using custom boxes. If you’re not, check with the warehouse on the box sizes they carry to make sure they have the right size for your orders. If not, a simple analysis of custom box fees vs the extra shipping fees for boxes that are too big will tell you whether that’s a profit protection center or not.

Do you have a preference for sustainable tape? Packaging? They need to know this too. Well in advance so that anything can be ordered and in stock before go-live.

Don’t assume they know exactly how you want it packed, SHOW THEM.

You just cannot over communicate at this point with your warehouse. You want to delight your customers, the 3PL wants to delight you. Give them the tools to make it happen.

Returns:

It looked like crap on my cat. So I returned it.

I wonder what they did with it?

Hopefully their warehouse didn’t just throw it into the corner where all the things nobody wants get lost. Those returns take up space and then it’s not available to ship out to someone else. What if their cat would look great in it?

It’s critical to think through your entire returns process. ReturnBear, Loop, Jordan McBain (liquidations), Hafback, Frate Returns – all have options for you. Make sure you’re really thinking through “best practices” on how you want them handled.

Then, you guessed what I was going to say next – write up an SOP. Your warehouse needs to be your partner in mitigating the high cost of returns.

For you warehouse peeps, look at Two Boxes, (Kyle Bertin) it’s a great tool for you to manage returns internally without taking as much time away from what your warehouse does best. You have a tablet, the warehouse associate walks through requirements on the screen set by the brand. They will use the camera in the tablet to do photo capture, create reports and send back to the brand. They also have value added services applied to make the product saleable again (steaming, cleaning, etc). Then the system looks at disposition logic to either go back to stock (grade A), or B, C liquidation or re-commerce channel, or grade D – destroy, recycle, landfill. Lastly, the RMA is closed out by the system.

Returns are a huge money suck. Make sure you have a plan. And make sure your warehouse is on board with it, since they’re going to be doing a lot of the work for it.

Packaging:

What’s your packaging dream? Do you hate foam peanuts? I do, with a fiery passion. (I once dropped a box of them in a windstorm. I’m sure every neighbor knows how I feel now, and all their kids learned some super colorful new words).

A brand needs to think carefully about packaging, both for costs and for customer appeal.

Then they need to tell their warehouse. Because your 3PL is just going to do it the way they always have if you don’t tell them what you want. MAKE AN SOP. Include pictures. Make sure they know what you expect, and you know what it will cost. Special requests are rarely free.

What else?

• What kind of dunnage/fill do you want?
• Special tape? Paper tape or branded?
• Your own packaging with your pretty logo on it?
• Stickers that go on the box?
• Packing slips?
• Gift wrapping? Note cards?

Next, what about your B2B customers?

• Branded packing slips for dropship? Vendor guide requirements?
• Make sure your warehouse has everything they need to make sure this piece is done the way you want. You’ll save money plus save on customer complaints. Win-Win.

Recap:

? Contract executed

? Stakeholders identified

? Contract excerpts pulled out and shared

? SLA’s shared

? Timeline expectations agreed upon

? SKU lists perfected

? Pricing lists shared

? Sales channels, retailer lists shared

? Backorders organized and shared

? Past and future sales data and forecasts reviewed

? POs, vendor lists

? Inbound stock reports

? Lists of expected reports and cadences agreed upon

? Tech stack laid out, integrations connected.

? Shipping Methods mapped

? Carrier contracts reviewed

? Packing SOP shared

? Returns process agreed to

? Packaging ordered

Effective planning and onboarding is key to a successful long term relationship. It all comes down to communication.

If you would like a copy of the plan shown in this blog, please email us, we’d be happy to help.

#B2B #ecommercetips #imports #inventory #logistics #ordermanagement #shipping #sop #RFP #supplychain #warehouse #onboarding

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B2B, channels, customer service, financial, general, imports, inventory, logistics, order flow, shipping, SOP, supply chain, warehouse 3PL