Working with a third-party logistics provider (3PL) can be a smart choice for many ecommerce brands. But not every 3PL is created equally, and finding the right one for your business can be tough.
Teaming with a 3PL consultant can help with the search. But what exactly do 3PL consultants do? And how can you be sure whether or not you need one?
What do 3PL consultants do?
The short answer is that 3PL consultants play matchmaker between your ecommerce business and potential fulfillment companies you might want to work with. But don’t let the simple explanation fool you. There’s a lot that goes into it.
A 3PL consultant is an expert in logistics operations and has deep market knowledge. They also have to be fast learners who are able to gain a deep understanding of your business needs to determine exactly what kinds of third-party logistics support you need.
They also spend years developing relationships with various fulfillment providers to help streamline the evaluation process and make your search as straightforward as possible. Those long-term relationships also provide nuanced insights you probably wouldn’t uncover otherwise.
How can 3PL consulting help your ecommerce business?
Many consulting services often kick things off by developing a list of fulfillment requirements based on your company’s logistics needs. This will help you weed out 3PLs who can’t (or won’t) offer the supply chain support you need.
Other consultants may opt to first help improve your existing logistics functions, assessing your operations and finding ways to make improvements. They may even play a role in getting those changes underway.
Once you’ve chosen a third-party logistics vendor, a consultant can also help you negotiate contracts and service level agreements. Their established relationships and extensive market knowledge could prove to be pretty useful at this stage.
What’s it like working with a 3PL consultant?
If you decide to work with a consultant, you can expect they’ll likely begin with some sort of assessment. They’ll want to do their due diligence, making sure they understand your company’s logistics operations inside and out. This often includes a lot of questions about your supply chain, like warehousing, inventory management, and reverse logistics.
Once they understand the needs of your business, your consultant will likely make recommendations for how you can improve your logistics functions, including a list of third-party logistics providers who might help. This may also include some form of Request for Proposal (RFP) support.
Then, they will help you evaluate and sift through your vendor options, offering special insights into the details of each 3PL, including their systems, fulfillment centers, and customer service levels. This is when you can whittle your options down to a shortlist, which is especially useful if you’re planning on conducting any site visits.
After you’ve made your selection, the consultant will work with you through the implementation process, making sure the new 3PL partnership and any operational changes get off to a good start.
As a final step, they’ll often conduct some level of monitoring to make sure your new 3PL is delivering on its promises and providing the services you need to hit your business goals.
How do 3PL consultants choose which 3PLs to recommend?
Consultants aim to help you find the 3PL that’s best equipped to give the service and support you need. So, after they’ve completed their due diligence and know exactly what those needs are, each prospective recommendation goes under the microscope.
All fulfillment services are on the table, including warehousing, inventory management, picking and packing services, kitting and assembly, reverse logistics, and client support.
Each 3PL’s costs will be thoroughly examined, too. This typically includes detailing their shipping costs, available carrier discounts, warehousing fees, and additional surcharges.
Your consultant will also review every 3PL’s technology stack. They’ll check for compatibility with your systems and the level of transparency their tech provides into all aspects of the fulfillment process.
Fulfillment center locations matter, too. Your consultant will verify the locations of each warehouse and make sure they have the geographical reach to meet the needs of your business (and your customers) while keeping your costs down and cash flow healthy.
Customer service will surely be near the top of your consultant’s list, as well. Making sure a 3PL can provide the level of support your company’s needs is a crucial consideration. Good consultants have a lot of experience and market knowledge on this topic and can often be a big help.
Do you need a 3PL consultant?
Not every situation requires a consultant. But many companies find it helpful to bring one in. Searching for and evaluate\ing every potential 3PL vendor takes up a lot of time and bandwidth. A lot of teams hire a consultant simply because they simply can’t commit to conducting the search in-house.
If you’re considering hiring a consultant, start by asking yourself some questions:
- Can your team dedicate the time required to conduct a thorough search?
- What other priorities do you need to focus on while also searching for a 3PL (e.g., marketing, product development, etc.)?
- Can you afford to let any (or all) of those priorities take a backseat until your search is complete?
- What opportunity costs could you anticipate from shifting your team’s attention away from those other priorities?
The idea behind answering these questions is to determine how much you could potentially lose by not hiring a consultant and weigh that against what you might gain. And naturally, that leads to the topic of costs and how much you might pay for consulting services.
How much does 3PL consulting cost?
The short answer is: it depends.
Depending on the company you work with, you might make payments directly to the consulting service. Other times, the consultant’s fees might come as a percentage of the savings they secure for you. And it might be that you don’t pay anything at all. In these cases, the consulting service is compensated by 3PLs for introducing you as a best-fit lead and potentially receiving an additional payment on the backend after you sign with one.
Red Stag’s built-in consulting services
Red Stag has relationships with a number of great consulting companies. But we also offer some consulting as a part of our sales process. That’s because we view each client as a relationship (not a transaction) and want to make sure we’re the best fit for what each company needs.
That’s why our quote process goes above an beyond what most other 3PLs offer. Instead of automated, online quotes, our team of experts will take the time to zoom in on your business to uncover the best ways we can provide the logistics support you need.
To be clear, there’s no napkin math here. We’ll deliver a 12-month pro forma along with a detailed analysis that specifies exactly what opportunities we see for improving your supply chain and how we can offer the best service for your company.
How is this different from a 3PL consultant?
We do our best to provide an accurate depiction of what your business’s financials would look like if you partnered with Red Stag. We get very granular in ways you’re unlikely to find with any other 3PL.
We’ll give your supply chain a thorough examination and deliver actionable insights on where improvements can be made and what it would look like to enlist our help to make them. From warehousing and order fulfillment to transportation and inventory management, we cover it all.
Where we differ from a good consulting company is in the scope of our knowledge. We can’t paint a picture of what your experience might be with another vendor. Instead, we can only speak accurately about what we do and how we can help.
A high-quality consultant, on the other hand, will be able to give you granular details on how your fulfillment operations would fare with a range of providers capable of delivering the support you need. If you want to compare the pros and cons of various vendors, a 3PL consultant can be a smart move.
Ready to explore your options?
Reach out to Red Stag today to see if we might be the right fit for your business. If not, we’re happy to put you in touch with some of the consulting companies we work with so you can explore what they have to offer.
