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Ask a 3PL Expert: 6 Top Retail Compliance Questions Asked of 3PL's

Posted By Administration, Thursday, March 9, 2017
Updated: Wednesday, March 8, 2017



by Scott Weiss, Port Logistics Group


Advice on routing guide compliance, 3PL relationships, and domestic logistics topics creating supply chain challenges for your organization. If you have a question or challenge please send your questions to sweiss@portlogisticsgroup.com.

Question
We're looking at several 3PL's. What questions should we be asking them before we make a final decision on a partner?
-Jeff, Dallas

Whether you are currently using a 3PL or considering their services, the following are six questions every 3PL should be able to answer for you and that you should make sure you clearly understand:

Does the 3PL have on-site vendor compliance dedicated staff, experts, or both?
A 3PL can have a combination of either. Nevertheless, monthly internal meetings should take place including discussion of new retailers, changed retailer compliance guides, etc. Typically a 3PL will have an on-site account manager that will be the compliance expert. The 3PL is also able to draw on experience and best practices from other client relationships shipping to a particular retailer.

How does the 3PL stay on top of retail compliance rules and changes?
A 3PL generally stay on top of this in three ways:

  1. Internal routing guide compliance "cheat sheets"
  2. Being in touch with clients and retailers through the performance of daily operation and monthly scorecards
  3. Participation in outside organizations such as the Retail Value Chain Federation

Should the 3PL's Warehouse Management System (WMS) have the ability to maintain information concerning compliance related rules based on a customer's requirements and provide automated checking against order fulfilment while ensuring compliance?
Yes, the 3PL's WMS should be able to maintain rules by account. As an example, label requirements greatly differ by retailer and/or even department within the retailer. A 3PL should be able to maintain the label requirements specific to an account. Messaging can be added to a client's pick tickets to ensure proper packing, label location, shipping requirements, etc.

How are customers compliance requirements communicated to warehouse staff?
A 3PL generally communicates this in several ways:

  1. Internal routing guide compliance "cheat sheets" are reviewed with the warehouse staff
  2. Diagrams and guidelines are posted on the warehouse floor
  3. Specific notes are recorded on the pick ticket or the radio frequency (RF) unit
  4. The customer provides updated routing guide requirements as they arise
  5. The account "expert" meets with the floor staff at least once per week and all new information is discussed at that time

Does the 3PL utilize any additional technology to help ensure and enhance compliance?
The technology a 3PL invests in to help ensure vendor compliance varies substantially. It can be as simple as taking digital photos to handheld barcode verification scanners all the way up to mechanized automated scanners that cost hundreds of thousands of dollars.

What are the typical 3PL policies if chargebacks are issued due to errors on the 3PL's part?
A 3PL's policy on chargebacks can vary. Here are some of the more common policies that are out there:

  1. The most extreme is when a 3PL agrees to assume the full amount of chargebacks
  2. The most common is to give the 3PL an opportunity to research and remedy any error that was caused by the 3PL and in the event of an error that results in a chargeback from a retailer, the 3PL is financially liable only to the dollar amount that was generated from the specific order
  3. A third common practice is to have a flat deductible rate per chargeback regardless of the amount of the chargeback

As you can see, there is no one standard answer for all. The 3PL world is not a one-size-fits-all model and every service provider has the right to run their business as they wish. It is your responsibility to make sure you ask the questions, leave no stone unturned, and discuss the potential relationship to make sure you are all on the same page.


Scott is a 20 year veteran of the 3PL industry and 14 year member of RVCF. Port Logistics Group is the nation's leading provider of gateway logistics services, including value-added warehousing and omni-channel distribution, transloading and cross-docking, eCommerce fulfillment, and national transportation. With 14 Distribution Centers and 5.5 million square feet of warehouse space strategically located by the Ports of LA/LB, NY/NJ, Seattle/Tacoma, and Savannah, Port Logistics Group provides the critical link between international transportation and the last-mile supply chain. He can be reached at sweiss@portlogisticsgroup.com or (562) 977-7620.

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