Outsourcing to a 3PL: Choosing a Fulfillment Center Location

"Determining the right size and locations for a distribution network can mean the difference between keeping customers or losing them." - Medical Device and Diagnostic Industry (MDDI) Magazine

Selecting the perfect location for your warehouse is one of the most important decisions you will make as a business owner. Failure to consider factors such as product origin, accessibility to highways, and future expansion plans can delay your products' arrival at your fulfillment center and hinder on-time deliveries to customers. Below is a look at the key expectations related to outsourcing to a 3PL and some useful tips to help you choose a fulfillment center that will facilitate order accuracy, speed, and processing costs.

What are the key concerns when outsourcing to a 3PL?

Outsourcing to a 3PL is a comprehensive solution for companies that do not have the internal resources or expertise to handle the logistics and transportation requirements for their orders. Top-notch 3PL providers are able to eliminate many of the hassles related to order fulfillment. Specifically, fulfillment centers providers address the following requirements for order fulfillment success:

1) Speed

Order delivery speed is a top concern for customers. As customers become increasingly demanding, your company must respond by preparing and delivering orders on time. Failure to adhere to your promise to deliver on time can cause your customers to turn to one of your competitors for speedy delivery.

2) Accuracy

In addition to expecting on-time delivery, customers expect their orders to be correct and properly delivered. Products delivered should match the products on their order form and quantities should be correct. E-commerce companies often turn to 3PL providers to help improve order accuracy and ensure that orders are delivered to the correct shipping address.

3) Costs

Speed and order accuracy should be considered in conjunction with operating costs. Outsourcing to a 3PL provider can help control costs by negotiating freight savings and improving efficiency. Additionally, they serve as the single point of contact for multiple carriers, enabling you to enjoy the financial benefits of carriers who compete against one another for your business.

What steps should you follow when choosing a fulfillment center location?

If your business is planning to outsource to a 3PL, one of the most important steps you can take to facilitate success is to choose a superb fulfillment warehouse location. By strategically selecting your location, you can create the ideal setting for your 3PL provider to help optimize speed, accuracy, and shipping costs. Below are five steps that you should take when choosing a fulfillment center location.

1) Determine where the majority of your customers are located.

Before you begin comparing 3PL locations, you should analyze your customer base and determine where your customers are located. Here are some points to consider with respect to your customers' location:

• If your customer base location-centric, a distribution center in the heart of that location makes sense.
• If you are losing chunks of customers in a key region, you may wish to consider a warehouse partner with multiple locations

The number of products sold by U.S. companies that are made in Asia continues to grow. With the average container of goods made in Asia taking two to four weeks to arrive in the United States, business owners whose imports from Asia are increasing should consider a location close to the ports where their goods arrive. Otherwise, there could be additional delays and costs to cover shipment of products from the port to the distribution center.

3) Decide whether you should have a single location or multiple locations.

Sometimes it makes sense for a company to partner with a 3PL that has multiple fulfillment center locations. Having multiple locations is a good strategy for companies that ship a lot of orders to customers who are heavily concentrated in two or more distinct geographical regions. Establishing multiple locations also makes sense if the products you ship are heavy in weight or costly to ship.

4) Consider area traffic and other driving hazards.

Traffic congestion and driver maneuverability are sometimes overlooked in favor of proximity and accessibility. Ideally, your fulfillment center should be located in a low traffic area that can easily be accessed by delivery trucks. As you evaluate potential locations for your fulfillment center, make sure that you consider the following tips:

• Avoid locations where traffic snarls are common
• Make sure to choose a location where trucks have plenty of room to maneuver and turn around

5) Select a location that is close to major highways and shipping hubs.

Choosing a location that is close to major interstates and shipping hubs is vital to the success of a growing business. Nearly every product received by an end-user or consumer will move by truck to or from the fulfillment center at least once before being received by the customer. Selecting a distribution partner whose warehouse location is easily accessible to major highways will enable them to get your products into the hands of your customers as quickly as possible.

The Bottom Line

The key to success for your growing business is to use care when selecting your fulfillment warehouse location. By remembering the tips above, you can help ensure that your distribution center becomes your company's greatest asset. We invite you to contact us to learn how we can help your business thrive.