FAQS

The advantages of having a single 3PL manage your warehousing and transportation include improved communication through a single point of contact, greater insights into inventory management and transportation data due to the fact that all your data is under a single data portal, and potential cost and service benefits through strategic supply chain solutions such as retail compliance processes, retail consolidation, and optimal load planning. By having a single resource or team to oversee your supply chain, you can ensure a streamlined approach to managing your supply chain operations.

A dedicated warehouse, also known as contract warehousing or contract logistics, involves a scenario where a single client exclusively uses a distribution facility. This dedicated space encompasses all aspects, including labor, value-added services (VAS), technology, and capital equipment, which are specifically allocated to the tenant. The primary advantage of a dedicated distribution center is its complete dedication to a single tenant. Contract terms for such arrangements typically span from 2 to 7 years.

Shared warehousing, alternatively referred to as multi-client or shared warehousing, is where multiple clients leverage the same distribution center and jointly utilize resources such as labor, capital equipment, material handling equipment, IT infrastructure, and other essential elements needed for an effective distribution and fulfillment operation. Shared warehousing solutions are typically tailored for mid-size businesses, with contract terms ranging from 2 to 7 years.

Public warehousing shares similarities with shared warehousing in that it also accommodates multiple clients within a single distribution facility. However, public warehousing solutions often feature short-term, month-to-month contracts. They primarily offer basic pallet in-out services, and pricing is usually structured based on a per-pallet cost. Public warehousing solutions are commonly chosen by small businesses and those with seasonal or fluctuating storage needs.

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• Labor Management: One of the primary advantages is achieving cost savings through efficient labor management. Additionally, 3PLs can optimize labor resources by sharing them among multiple clients, resulting in further cost reductions.
• Space Optimization: You can adjust your network and have multiple distribution nodes to serve your customers.  Additionally, a 3PL will help you reduce charges by optimizing space utilization.
• Enhanced Speed-to-Market: A 3PL can streamline your supply chain, reducing lead times and improving your ability to quickly reach your customer. This can be crucial for meeting customer demands and staying competitive.
• Optimized Shipping Costs: Through their network and experience, 3PLs can negotiate favorable shipping rates and optimize transportation routes, ultimately lowering freight costs for your business.
• Technology: Leverage leading supply chain technology from a 3PL that include warehouse management systems, order management systems, labor management system, transportation management systems that drive efficiencies to your operation. 

The location of your warehouse or distribution center can make the difference between a satisfied customer and an unhappy one. Speed-to-market, fast shipping to your customers, reduced transportation, and parcel costs are all cost-saving measures that are critical factors to selecting the right location. One key factor to consider is the proximity of your warehouse to your manufacturing facilities. Being situated close to your manufacturing plants can provide significant advantages, such as minimizing lead times, reducing transportation costs, and streamlining the supply chain.

Additionally, it's crucial to assess access to transportation hubs, including ports. If your business relies on importing goods from overseas, distance to your primary port can expedite the movement of goods, reduce shipping costs, and enhance overall supply chain efficiency.

When working with a Third-Party Logistics (3PL) provider, they should help you evaluate all these factors and determine your optimal locations for your distribution centers. Ask your 3PL if they offer network analysis and supply chain design services, including location selection studies, which will provide an objective, cost-driven analysis and offer multiple location scenarios tailored to your specific needs.

A Third-Party Logistics (3PL) company specializes in warehousing, distribution, and transportation solutions. A 3PL operates with the goal of maximizing cost savings to your supply chain and helping you grow and scale your business. A partnership with a 3PL will allow you to leverage their expertise while letting you focus on your core business competencies. Here are a number of ways a 3PL can help your business.

1. Cost Efficiency: A 3PL can help your business control costs. By outsourcing logistics operations to experts who have economies of scale, you can reduce operating costs including transportation, warehousing and inventory, labor and technology investments.
2. Scalability and Flexibility: As your business grows or experiences fluctuations with seasonal demand, a 3PL can scale their services to meet your needs. This adaptability enables your business to respond quickly to changing market conditions without the burden of substantial infrastructure investments.
3. Expertise: 3PLs are logistics experts. They possess specialized knowledge and experience in supply chain management and execution. Expertise can extend to navigating complex regulatory issues, mass-retailer compliance, and optimizing your processes to drive cost and service advantages.
4. Focus on Core Competencies: With a 3PL handling logistics, you can concentrate on your core business activities. This not only streamlines your operations but also frees up your time and resources for innovation and strategic growth.
5. Improved Service Levels: Partnering with a 3PL can lead to improved customer service. They can offer faster and more reliable delivery options, ultimately enhancing customer satisfaction. Your 3PL can help you optimize inventory levels to reduce stockouts and excess inventory costs.
6. Technology and Tools: 3PLs will have access to warehouse management systems (WMS), transportation management systems (TMS), order management, labor management and advanced technology solutions to drive efficiencies in your supply chain. They can also offer data analytics to provide insights into your supply chain performance, supporting data-driven decision-making.
7. Reduced Labor Costs: Outsourcing logistics tasks to a 3PL simplifies administrative work associated with transportation, warehousing, and order fulfillment. This streamlining of operations can lead to increased efficiency and productivity.
8. Competitive Advantage: Speed-to-market is another advantage of partnering with a 3PL. They can design an order fulfilment process to meets the demands of your customers and provide you with an competitive edge in delivering products quickly and efficiently.
   
   

Consider both speed and cost, as well as the expectations you've set with your customers. If your promising delivery within 2-3 days, choose a partner and program that can reliably meet this timeline, even if it comes at a slightly higher cost. Each carrier and parcel program offers unique benefits, so evaluate their advantages carefully. Additionally, check with your 3PL partner—they may offer programs that provide both faster delivery and cost savings.

You may ship business to business (B2B) and direct to consumer (DTC). If you integrate these different shopping methods (an omnichannel strategy) you can realize benefits from having one 3PL and a single distribution point.  Here are some benefits you may consider: 

Maximized Labor Efficiency

• A single 3PL with integrated B2B and DTC fulfillment can optimize labor allocation.
• As order volumes shift between retail (B2B) and e-commerce (DTC), the 3PL can flexibly adapt resources to handle peak demands in one channel without underutilizing capacity in the other.
• This ensures the workforce is used efficiently, reducing operational costs and improving productivity.

Improved Inventory Management

• By managing all inventory within one operation and distribution point, you’ll benefit from:
  • Improved inventory accuracy: Centralized inventory visibility reduces errors, ensuring you can meet customer expectations.
  • Increased fill rate percentages: Orders can be fulfilled faster and more reliably due to better oversight of stock levels.
  • Reduced backorders: With a single inventory pool, stock is less likely to be overcommitted to one channel at the expense of another.

Operational Efficiencies

• Omnichannel strategies allow you to streamline processes like receiving, storage, and shipping.
• A single distribution point eliminates redundancies and simplifies logistics, making it easier to manage supply chain operations.

Cost Savings

• Transportation: A single distribution point reduces transportation complexity and costs by consolidating shipments.
• Storage: Managing all inventory in one warehouse or campus avoids duplicating storage requirements.
• Technology: Using one 3PL system for both channels can save on software and system integration expenses.

Flexibility to Handle Demand Fluctuations

• Peak seasons in DTC (e.g., holidays) or spikes in B2B orders can be managed seamlessly by reallocating labor and resources within the same operation. This flexibility minimizes disruptions and ensures consistent service levels.

Enhanced Customer Experience

• Faster fulfillment and fewer errors improve service for both retail partners and end consumers, strengthening relationships and boosting brand loyalty.

1. Core Features: Ensure the WMS includes features like inventory management, order tracking, slotting optimization, and reporting capabilities.
2. Scalability: Evaluate if the WMS can scale as your business grows or during peak seasons.
3. Customization: Determine if the system can be tailored to meet your specific requirements, such as handling unique SKUs or specialized workflows.

1. ERP and TMS Integration: Verify that the WMS integrates seamlessly with your Enterprise Resource Planning (ERP) system and any Transportation Management System (TMS) you use.
2. APIs and Compatibility: Assess the availability of APIs and compatibility with your e-commerce platforms or other software tools.

1. Inventory Tracking: Ensure the WMS provides real-time inventory tracking and updates.
2. Dashboards and Reporting: Look for user-friendly dashboards that offer actionable insights into warehouse operations and KPIs.

1. Industry Fit: Ensure the 3PL's WMS is designed to handle the specific requirements of your industry, such as temperature-controlled storage for food and beverage.
2. Order Fulfillment Options: Evaluate capabilities like cross-docking, pick-and-pack, kitting, or other value-added services.

1. Regulatory Compliance: Check if the WMS complies with relevant regulations (e.g., FDA, OSHA, or GDPR for data security).
2. Data Security: Verify the system has robust cybersecurity measures to protect sensitive data.

1. Adaptability: Evaluate the WMS’s ability to adapt to new technologies and business models.
2. Emerging Technologies: Look for features like AI-driven analytics, robotics integration, or IoT support for future scalability.

1. Customer Support: Assess the level of support provided by the 3PL, including availability, response times, and expertise.
2. Continuous Improvement: Determine if the 3PL regularly updates the WMS to stay ahead of industry trends and challenges.

Metrics for Success

1. KPIs: Define measurable success metrics, such as order accuracy, inventory turnover, or warehouse efficiency improvements.
2. Benchmarking: Use these KPIs to benchmark the WMS’s performance over time.

1. Size and Weight: Larger, heavier items may be better suited for bulk storage, while smaller, lightweight items are typically better stored in racks.
2. Fragility: Fragile items require racking to prevent damage, whereas durable goods can be bulk-stored.
3. Turnover Rate: High-turnover items might benefit from bulk storage for quicker access, while low-turnover items are better suited to racking for efficient space utilization.
4. Packaging Type: Palletized or uniformly packed goods fit well in racks; loose or irregularly shaped items may require bulk storage.

1. FIFO vs. LIFO: Racking systems often support FIFO (First-In, First-Out), which is critical for perishable goods. Bulk storage tends to operate on LIFO (Last-In, First-Out) principles.
2. Seasonality: Seasonal peaks might favor bulk storage to handle large incoming volumes efficiently.

1. Space Utilization: Racking maximizes vertical space, allowing for high storage density in smaller footprints.
2. Cost Efficiency: Bulk storage is cost-effective for items that don’t require separation or frequent access.

1. Picking Methods: Bulk storage is ideal for full-pallet or case picking. Racking works better for split-case or item-level picking.
2. Accessibility: If frequent picking is required, racking offers better organization and faster retrieval.
3. Equipment Compatibility: Forklift or material handling equipment requirements differ between bulk storage and racking systems.

1. Ceiling Height: Higher ceilings make racking more viable to maximize vertical storage.
2. Floor Load Capacity: Heavier bulk storage may exceed the floor's load-bearing capacity.
3. Aisle Width: Bulk storage often requires wider aisles for maneuvering, while racking can accommodate narrow aisle configurations with the right equipment.

1. Product Lifespan: Products with long shelf lives can be stored in bulk, while those with short lifespans or expiration dates often require racking.
2. Handling Requirements: Frequent handling or inventory audits are easier with racking systems.

1. Fire Codes and Safety Regulations: Racking may be necessary to comply with fire safety and insurance requirements, such as proper sprinkler system coverage.
2. Product Security: Valuable or sensitive products are better secured in racks.

1. Initial Investment: Racking systems require a higher upfront cost but provide better long-term efficiency.
2. Flexibility: Bulk storage is easier to reconfigure for temporary changes or fluctuating inventory.

Assess Cultural and Value Alignment

1. Do their culture, values, and ambitions align with yours?
2. A good "fit" ensures a strong partnership where your 3PL has your organization’s goals and values at the forefront.

Prioritize Relationship Quality

1. Look for a 3PL that prioritizes building a relationship beyond transactions.
2. Continuous improvement and alignment on what matters to you are key indicators of a strong partner.

Evaluate Capabilities and Expertise

1. Confirm they have the specific capabilities your business requires.
2. Verify their experience in your industry or with similar needs.

Consider Geographic Presence

1. Determine if their locations align with your logistical needs.
2. If they aren’t currently in your preferred locations, assess whether they can adapt or scale to meet your requirements.

Gauge Their Engagement in Understanding Your Business

1. Ensure they ask deep and thoughtful questions about your business.
2. A 3PL that doesn’t dive into your operations and objectives may only provide a transactional relationship, falling short of your expectations.

Evaluate Their Commitment to Continuous Improvement

1. Seek a partner that demonstrates a proactive approach to enhancing processes and delivering long-term value.

The location of a fulfillment center is critical for several reasons, especially when considering logistics, supply chain efficiency, and customer service. Here’s why selecting where your distribution nodes are located is so important:

Proximity to Customers: A strategically chosen location enables faster shipping times, enhancing customer satisfaction and reducing shipping costs. In some cases, it allows for same-day or next-day delivery.
  
Lower Shipping Costs: Being close to key markets or transport hubs shortens transportation distances, cutting fuel costs, reducing carrier fees, and ultimately saving on shipping expenses.

Access to Major Transport Networks: Being near highways, railways, airports, or ports provides better connectivity, faster transit times, and more shipping options, boosting supply chain efficiency.

Improved Inventory Management: A centrally or strategically located fulfillment center helps optimize inventory across multiple regions, reducing the need for excess stock and improving the flow of goods .

Labor Market Access:  This is important! The availability of skilled labor is influenced by location. Choosing an area with a proximity to a strong labor market ensures you are able to manage staffing adequately, particularly during peak seasons.

Cost Efficiency: Location impacts real estate costs, tax incentives, and access to affordable utilities. Choosing a cost-effective region can lower operational expenses.

Scalability: A well-located fulfillment center makes it easier to scale operations, accommodate growing demand, and expand into new markets without major infrastructure investments.

Environmental Impact: Being closer to customers reduces the carbon footprint by shortening the distance goods must travel.

The right location is critical to maintaining a competitive, efficient supply chain that meets customer expectations. Let ODW Logistics help with your location analysis.  Our team can conduct a comprehensive network analysis and gravity study to deter your ideal location based on your distribution needs. 

Leverage Your Network: Start by talking to colleagues, friends, and network partners. If you know someone who has experience working with 3PL providers, they can offer valuable insights. People you trust are unlikely to risk their relationship with you, so they’ll often provide honest, candid recommendations based on their experiences.

Use Online Resources: The internet is a powerful tool for researching potential 3PL providers. Be specific in your searches by including keywords related to your needs, such as industry-specific terms or geographic requirements. For example, search for “food and beverage 3PL near Columbus, OH” if that’s relevant to your business. Once you identify potential providers, explore their websites, read reviews, and seek out feedback from associates or forums. These steps will help you narrow down your options.

Engage Directly with Providers: Once you’ve shortlisted a few providers, invest time in calling and speaking directly with their representatives. This interaction will help you understand their capabilities, services, and company culture. It’s essential to ask questions about their experience in your industry, technology offerings, scalability, and how they handle challenges like seasonal volume fluctuations or supply chain disruptions.

Prioritize Fit Over Speed: Finding the right 3PL takes time, and it should. This is a partnership where you entrust your fulfillment, inventory, and customer satisfaction to another organization. Take the time to evaluate their track record, assess their alignment with your business values, and ensure they can meet your specific needs.

A third-party logistics provider (3PL) can help you reduce retail charges and fines by leveraging their expertise, systems, and processes to ensure compliance with your retail partners' specific requirements. Here’s how:

Deep Retail Expertise: A qualified 3PL will have experience shipping to the retailers you're working with, understanding their specific compliance requirements, such as delivery schedules, labeling, packaging, and documentation. This reduces errors that often lead to chargebacks. A knowledgeable 3PL understands Walmart's specific OTIF metrics, including the current requirements of 90% on-time and 95% in-full deliveries. This expertise ensures that shipments meet Walmart's stringent standards, minimizing the risk of penalties.

Proactive Communication: Regularly providing your 3PL with up-to-date requirements from your retail partners ensures they are equipped to meet those standards. Your 3PL should maintain open communication to anticipate and adapt to any changes in retailer requirements.

Accountability and Systems: A reliable 3PL employs robust systems to track and ensure compliance at every step. They should document and verify that all shipping and labeling requirements are met before shipments leave their facilities.

Training and Knowledge Sharing: Many chargebacks occur due to a lack of knowledge or experience. Partnering with a 3PL that invests in training its staff on retailer requirements and best practices helps prevent errors.

Process Optimization: Your 3PL should have systems in place to streamline processes like labeling, paperwork, and routing guide compliance. This helps ensure shipments are prepared correctly and on time, reducing the risk of missed deadlines or errors.

Root Cause Analysis and Prevention: If a chargeback does occur, a quality 3PL will conduct a thorough analysis to identify the cause and implement corrective actions to prevent recurrence.

Transportation management services can bring significant value that cannot be discovered working directly with the carriers:

• One-click access to multiple carriers, services, and rates.
• Consolidated access to a portal that contains all freight shipments.
• Business intelligence and baseline information to ensure best in market costing.
• Tracking resources to perform exception management and increase on-time delivery and customer satisfaction.

There are 5 big opportunities for value-added capabilities a 3PL can bring:

1. Reduce cost through the scale of a leveraged contract with parcel providers.
2. Improved options through rate shopping individual packages.
3. Consolidated audit and reporting capabilities.
4. Real-time tracking and alerts.
5. E-mail / text customer notifications.

Freight consolidation is a natural driver of freight cost. The more freight that can be loaded into a trailer, the more cost-effective. Freight consolidation also ships more directly than LTL, which reduces touches (less cross-docks), which will reduce the likelihood for claims. Consolidation is also the "green & sustainable option." Trailers more fully loaded reduces congestion on our overcrowded highways.

Time, money, and potential. Integration maximizes time to the planning horizon, which will directly correlate with reduced cost and improved partner management. Integration eliminates blind spots. There are dozens of decision points in the supply chain process - collective alignment reduces mistakes in handoffs, enabling a constant flow of goods and information. Finally, end-to-end supply chain visibility of tracking and cost is only available through a very solid integrated solution between warehouse and transportation.

Parcel contracts and tariffs can be rather complex and sometimes overwhelming. An audit will allow you to better understand where your money is going while uncovering surcharges, fees, or other shipping inefficiencies that drive up shipping costs.  

Key ingredients include applying costs for inbound material, manufacturing, warehousing, and outbound transportation. Combining each of these without integrated systems and reporting can be very challenging.  A great 3PL can align systems and processes to enable a true and verifiable cost-to-serve model. Beyond a one-time report, great system integrations can deliver a repeatable and sustainable model.

Insourcing a TMS is always an option - however, it can be costly to purchase, implement, and maintain. Over the last decade, dozens of niche providers of transportation services have evolved with technology.  A one-time implementation will likely not deliver the breadth of services (tracking, rating, network capacity, automation) that you are targeting. 3PLs that have invested in the base TMS, outsourced specialization software and proprietary integration will have best-in-breed and current technology that can keep your company ultra-current on the cutting edge of managing your freight.