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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.

CLICK HERE to return to the MARCH 2017 RVCF LINK

Tags:  3PL 

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Ask a 3PL Expert: WMS and Outsourcing

Posted By Administration, Thursday, February 9, 2017
Updated: Tuesday, February 7, 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
Should you use your own WMS or your 3PL's when you outsource?
-Danielle, Torrance, CA

A good warehouse management system is an essential component of a company's distribution strategy, especially in the increasingly complex world of omni-channel fulfillment. Efficiently planning, waving, and optimizing orders to be processed in a day or shift reduces cost per unit and drives high levels of customer service. While all but the smallest players require such capabilities today, the question of whether companies need to own the WMS or use that of a logistics service provider's confronts most 3PL customers at some point. A good 3PL will recognize the importance of this decision and help prospective customers work through the WMS decision early in the sales process.

Ideally, a company will want to manage all of its information within a single WMS platform, so it has the same system, processes, and inventory visibility, regardless of whether it owns the warehouse management system or relies on a 3PL's. Some companies choose to stay with their own packaged or proprietary system for the following reasons:

  1. Integration costs – they may not want to invest the time and IT resources to integrate with a new WMS
  2. Control – fear that they will lose control of how the system is updated and upgraded over time

These are legitimate concerns and a 3PL should be prepared to work with clients no matter which avenue they decide to take, since the new processes and procedures may result in higher costs for a 3PL, at least for some time. Moreover, the customer retains responsibility for uptime, maintenance and user administration. When a customer does decide to retain its own system, a 3PL must have the trained staff and expertise to accurately and efficiently execute operations as if they were an extension of the customer's supply chain network. For example, a national retailer of women's specialty clothing lines opted to use its WMS at all of its facilities and to require each of its 3PL partners to use it as well. They wanted to have complete inventory visibility in one system. Additionally, they wanted a very specific quality control process built into their warehouse processing and they decided it would be beneficial to implement their own system at all facilities. When they dropped that system into a dedicated warehouse operated by the 3PL, the 3PL brought in trained experts for that particular WMS and the result was a very seamless integration and a facility that looks and operates just like every other in their network.

Implementing a customer system in a 3PL's warehouse does, however, have its drawbacks. Customers in many industry verticals experience spikes in volume and retail is certainly no different. The retail environment often sees very high quarter end demand in volume. There are four major advantages to relying on the system of a chosen 3PL provider:

  1. Faster implementations
  2. More flexibility in choosing or changing locations in the future
  3. Relief from the burden of maintaining and updating a WMS
  4. Ability of 3PL to move trained labor from account to account in a shared warehouse environment

When a logistics service provider uses a single, consistent WMS across all customers and within their facilities, it increases flexibility to move labor around on its customers' behalf. Change is a constant in retail and not only in volume. For example, fashions and tastes dictate new product introductions and discontinuations of older lines. System modifications have to keep in step, but WMS changes can be costly. The customer that retains its own WMS foots that bill whereas the 3PL pays when its system is used. Of course, there are fees involved when using the provider's system, but they should be much lower when that investment is outsourced to the 3PL as the costs are spread across multiple clients.

A very important factor to consider is the competence of the client's IT staff. Implementation can be as quick as 30 days if the customer's IT team is good, but even complex scenarios should rarely take longer than 90 days. Flexibility is key in every facet of a 3PL/customer relationship. A client that gives all of its business to a provider, for instance, is advised to align itself with that 3PL's WMS. Not only is it a low cost solution for them from an annual maintenance standpoint, but it allows for customization designed specifically to meet the client's needs. Moreover, it more easily permits system changes as those needs evolve. For example, a retailer that changes its business model to do more e-commerce will require a different approach to picking. A flexible 3PL that can accommodate those changes quickly is indispensable.

In conclusion, every organization manages its supply chain differently and some operators contend that there is loss of control when they utilize the WMS of their logistics service provider. Here are some key takeaways when deciding to use your WMS or the 3PL's:

  1. You never get a second chance to do things right the first time. You have to do due diligence to see that the 3PL is capable of doing what they are promising and that they have a robust IT department that can deal with anything.
  2. Identify and address issues when a relationship is first contemplated.
  3. Once the relationship begins, you must always keep your eye on the ball. When you transmit documents, make sure you have the right process in place – what has been picked, packed and routed for shipment. It is your duty to monitor all of this on a daily basis. You cannot just wait to see what happens.

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.

CLICK HERE to return to the FEBRUARY 2017 RVCF LINK

Tags:  3PL  WMS 

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Ask a 3PL Expert: To Count or Not to Count

Posted By Administration, Thursday, January 19, 2017
Updated: Tuesday, January 17, 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've instructed our 3PL not to allow carriers to sign bills of lading as "Shipper's Load and Count" (SLC); however, they disregard our instruction because the drivers refuse to count the freight. Do we have any recourse when the 3PL won't abide by our instruction?
-Debra, Newark

The answer to the question is tricky and not as straightforward as one might think. It is clear why you are frustrated and wondering why the 3PL is not following your instructions. However, there are a number of variable factors at play that need to be considered.

In most instances, the drivers do not want to count because they are on a tight schedule and need to keep moving. Counting the outbound cartons slows them down. If and when the 3PL draws a line in the sand and tells them they must count the outbound freight, there are three possible outcomes from this approach:

  1. The driver will count with the warehouse
  2. The driver will write down what the bill of lading says
  3. The driver will refuse to count

Even if the driver agrees to count the freight, at some point a member of the driver's dispatch will call the driver or the warehouse shipping and receiving desk if the count is taking too much time. The dispatch will want to know what is taking so long and why the driver is still there. They will then either threaten to pull the driver or actually make the driver leave.

By far, the biggest variable that determines the three outcomes is your product profile. Here are some examples of easy customers where outcome 1 (count with the warehouse) is more likely – occurrences where the driver would be able to count the outbound freight in minutes, not hours:

  • Low SKU count
  • Big cartons
  • Palletized product
  • Low number of cartons per order
  • Mostly less-than-truckload (LTL) moves

Customer profiles where the driver would have to spend hours to count the outbound freight lend to likelihood of outcome 3 (refusing to count) occurring:

  • High SKU count
  • Small cartons
  • High number of cartons per outbound order
  • Floor loaded cartons
  • Full truckload (FTL) moves

As the desire is for the driver to count the freight, anything that can be done to encourage that result should be addressed. Some possible action items:

  1. Set up a meeting between you, your retailer's traffic department and/or the carrier, and the 3PL. This could be at the 3PL's DC, the retailer's consolidation point or DC, or the carrier's office. What can be done to simplify your freight so the driver can count it? More palletized freight? Load consolidation? More frequent pick-ups? Is counting the freight even an option?
  2. Accuracy of outbound freight is the primary driver of you wanting to count the freight before it leaves the 3PL dock. What SOP's can be put in place to ensure or confirm accuracy of outbound orders at the 3PL so counting of outbound orders is not such a concern? RF Scanning? Digital photos? Key Performance Indicators (KPIs) for outbound order accuracy?

From a liability standpoint, it is in the 3PL's best interest to not allow SLC because generally the 3PL is ultimately responsible if there is a discrepancy. However, if the 3PL takes a hard stance with the driver as a result of your insistence, then it is entirely possible that drivers could may start getting pulled – meaning you're now dealing with your product not shipping out on time and possibly missing the ship window altogether. In this situation, the 3PL is truly stuck between serving you, their customer, and the driver that is picking up on behalf of your customer. As such, anything that you, the supplier, can do to alleviate the hindrances that keep the driver from counting is in everyone's best interest.


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.

CLICK HERE to return to the JANUARY 2017 RVCF LINK

Tags:  3PL  shipper-load-and-count  SLC 

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Ask a 3PL Expert: 3PL Set-ups

Posted By Administration, Thursday, October 13, 2016
Updated: Tuesday, October 11, 2016



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
If you are already shipping to customers that we ship to, then setting them up should be easy, right?
-Jeff, San Francisco

Partnering with a 3PL that presently ships to your current customers can be a very sound decision; however, it does not necessarily guarantee success. Here are eight checklist items to review:

  1. Routing guide expertise. You'll want to make sure that your 3PL is familiar with shipping to retailers in general. That should be part of your due diligence. What retailers do they ship to today? What systems do they have in place to document routing guide requirements by retailer?
  2. Familiarity with your customers. The reality is that some retailer customers are more challenging to ship to than others. You should provide the 3PL with a checklist of all the customers you ship to and in their various forms, such as drop ship, collect, prepaid, etc. Have them check off the boxes to verify their familiarity. How many orders are they processing for each retailer in each form on any given month?
  3. Track record in shipping to your customers. Just because a 3PL is shipping to your customers does not mean they are doing a good job. Ask for a historical report that details how many orders they have fulfilled to your key customers, what their order fulfillment accuracy is, and what their chargeback history is by retailer. Have an open and honest discussion with them. Which retailers are causing them to lose sleep at night?
  4. Reasonable testing period. Even though a 3PL may be handling multiple clients shipping to the same retailer, you cannot just flip the switch overnight. For many retailers, shipping requirements vary – even by department. You need to establish a reasonable time period to integrate all of your data before you go live. 60-90 days is typically a reasonable implementation period.
  5. Written approval from your customers. In all circumstances, it is highly recommended that all routing guide compliance document testing take place before you go live. Labels should be approved, bills of ladings should be signed off on, and the 3PL should be set up as a ship point. Not dotting all of your i's and crossing all of your t's can lead to a great deal of heartache down the road.
  6. Closely monitor the first 90-150 days. Retailers are often delayed in sending chargebacks months after a violation occurs, so the first 90-150 days are crucial to determine if all your planning and testing have been successful. Monitoring this period very closely and maintaining constant communication will avoid any major surprises.
  7. Routing guide updates. Retailers will frequently revise their routing guides throughout the year. What systems, notifications, or SOP's does the 3PL have in place to update these requirements? What do you have in place to notify your 3PL of changes?
  8. Implications for not shipping correctly. Chargebacks are a delicate balance. On one hand, the cost of paying chargebacks is not built into the 3PL's rates so a 3PL can never assume the full liability of a chargeback. On the other hand, a 3PL should have skin in the game and stand behind their service when service failures occur. In between those two sides needs to be some mutually agreeable wording that satisfies the needs of both sides when service errors do occur.

So, as you can see, just like most things in the logistics industry things are not as easy as they seem. Some of the discussions no doubt will be painful. You will hear answers you do not want to hear. However, going through the above checklist (and more) will allow for open, honest, and meaningful upfront discussions and minimize any long-term pain.


Scott is a 20 year veteran of the 3PL industry and 13 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.

CLICK HERE to return to the OCTOBER 2016 RVCF LINK

Tags:  3PL 

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Ask a 3PL Expert: Service Provider Closures

Posted By Administration, Thursday, September 8, 2016
Updated: Wednesday, September 7, 2016



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
Our 3PL warehouse just told us they closing their doors in a month. How could this happen to us during our peak season and what are we supposed to do?
-Bill, New York

The reality is that every year companies in every industry go out of business. Logistics is not immune to this reality. And it is not just small, mom-and-pop businesses that do not make it. On August 31st, the global supply chain was paralyzed when Hanjin, the world's 7th largest container shipping line, filed bankruptcy and all of their assets were frozen. The result has left thousands of importers stranded and scrambling.

In 2016, more and larger trucking companies are failing as fuel prices rebound and demand for freight services remains lower than forecasted. Last year, 310 trucking fleets ceased operations. According to the Wall Street Journal:

In the second quarter, 120 trucking companies with an average fleet size of 17 tractor-trailers halted operations, according to an analysis by researcher Avondale Partners LLC. That’s up from 70 firms with an average fleet size of 14 big rigs in the same quarter a year earlier. 1

Typically the 3PL or logistics provider is between your product and your customer so buyer beware! Here are five suggestions to minimize your risk:

  1. Research the financial health of your provider prior to selection. If your provider is publicly traded, by law they must disclose important financial information about their company. Review key financial documents and reports such as annual reports, balance sheets, income statements, and cash flow statements. Take the time to read stories and articles about them and ask industry peers to see if you hear any whisperings. Although private companies often must share their financials with their lenders and investors, they have no regulatory obligation to share them externally in the way public companies do. There are many difficulties in searching for private company information. One of the most common sources for private companies is Dun & Bradstreet. You can also request to talk to references such as banks and current customers. How long have they been in business? Who owns the company? Is it family owned or private equity? What other customers use their services? Are they charging fair, market rates or rates that are too good to be true? Has management had any past history of bankruptcies at other companies? How long has senior management been in place? Just like publicly traded companies, ask industry contacts for their thoughts.
  2. Stay on top of the financial health of your provider every quarter. Get an update and any inside information from the management team. Google articles on the internet. Always stay on alert, no matter what. Watch for warning signs such as rates that are too good to be true, rumors around the industry, hiring freezes, closed door meetings, constant changes at the top, good employees starting to leave, constant layoffs and reorganizations, unhappy employees, budget cuts, company stock in a free fall, and/or accounts receivable constantly calling to collect money.
  3. Understand and read every sentence and every word on the terms and conditions of your agreement before you sign the agreement and after you have signed the agreement. Assume the worst and prepare for the worst-case scenario. Anything is possible. Often times banks and financial institutions freeze the assets of the company. Can your container still be picked up at the port? What happens to your existing inventory at the warehouse? Can your product still be shipped out of the warehouse? Can your product still be delivered to the DC?
  4. You should be able to sleep well at night with your provider. If you are concerned at all about the financial health of the provider, do not put all of your eggs in one basket. Express your concerns to the provider and obtain their feedback. If you have any concerns, minimize your risk by using multiple providers or giving that provider less volume or your less urgent/high profile business, or stop using that provider entirely.
  5. Have a business continuity back-up plan to prepare for the worse. Maintain relationships with other providers. Who will pick up your containers if your drayage carrier goes out of business? Who can take in and store your product if your warehouse provider goes out of business? Who will deliver your product if your outbound trucker is no longer up and running? Do you have other product that can be substituted if you cannot move certain product? Do you have a message that you can convey to your customers informing them of your supply chain disruption?

Too many people are not prepared for the worst. They think that it can never happen to their company or their provider, but it does happen and will continue to happen. Woolworth, Montgomery Ward, Pan Am, Worldcom, Linen-N-Things, all were at the top of their industry at one time or another and it was believed they would be around forever. Alas, they are all no more. Realize and be prepared for the reality that ANY company can go out of business – including yours.

[1] http://www.wsj.com/articles/trucking-company-failures-on-the-rise-1468486801


Scott is a 20 year veteran of the 3PL industry and 13 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.

CLICK HERE to return to the SEPTEMBER 2016 RVCF LINK

Tags:  3PL  Closure 

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Ask a 3PL Expert: Drop Shipping

Posted By Administration, Thursday, August 11, 2016
Updated: Tuesday, August 9, 2016



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
Our business has seen a huge shift this past year in drop ship requests. Our entire outbound shipping profile has changed. We have gone from a 100% case picking profile to about 60% case pick/40% each pick and we have all kinds of service failures with our 3PL. What is going on?
-Lee, Charlotte

This shift can be explained with one term:

Drop ship
verb
gerund or present participle: drop shipping
move (goods) from the manufacturer directly to the retailer without going through the usual distribution channels.

The world of logistics is changing and one of the biggest changes is the increase in drop shipping requirements by the retailers. This trend has huge implications for the retailer, importer, warehouse (3PL) and the consumer.

In the past, these types of orders were handled in this manner:

  1. Retailer transmits order to importer
  2. Importer (3PL) fulfills order in bulk master cartons or pallets to retailer's DC
  3. Retailer maintains inventory
  4. Retailer markets product on website
  5. Retailer transmits orders to their DC
  6. Retailer's DC picks and pack product
  7. Small parcel carrier delivers to the consumer

However, the present state is as follows:

  1. Retailer markets product on website
  2. Retailer transmits orders to importer
  3. Importer (or 3PL) picks and packs order
  4. Small parcel carrier delivers to consumer

So at least three steps have been eliminated in the supply chain (sometimes more) and there are now significant supply chain implications for each of the stakeholders as a result of this trend:

The retailer:

  • Does not have to maintain the inventory, which frees up space
  • Can offer a higher assortment of SKU's since they are not maintaining inventory
  • Does not fulfill the outbound orders, which frees up labor and costs
  • Holds the importer accountable for service performance

The importer (3PL):

  • Maintains the inventory, requiring more warehouse space (costs) and inventory management
  • Performs the order fulfillment process, requiring higher labor costs
  • Can offer a higher assortment of SKU 's since they maintain the inventory
  • Can get the product to market sooner since they control the turnaround of the order fulfillment
  • Is accountable for service performance (and service failures)

As such, the 3PL (warehouse) must change their fulfillment structure as they cannot handle pick and pack orders the same way as case or pallet picking – a whole new way of thinking is required or else labor costs can spiral out of control. The cost of order picking is estimated to be as much as 55% of the total warehouse expense, so various changes to the paradigm must take place to accommodate drop shipments. One such change is the need for engineered solutions, including pallet racking, wire decking, and automation as additional warehouse space is needed due to more on-hand SKU's that cannot be stored in full pallet quantities. The increased inventory also requires accurate inventory management – meaning a robust warehouse management system (WMS). Another consideration is that pick and pack is certainly more labor intensive and has lower productivity than case or pallet picking. Of course, these types of orders do not require the typical routing lead times, but the need for a fast turnaround time requires greater communication and forecasting so the warehouse must plan their labor accordingly.

For most importers and manufacturers, chances are you're already being asked to drop ship orders today; if not, it's not a question of if, but when you will. If you're not drop shipping today, acknowledge the inevitable. Be proactive and educate your sales department of this trend. Ask them to review the future of drop shipping with the retail buyer next time they meet. If you are already actively supporting drop shipping programs, you must work with your warehouse or 3PL to make sure your footprint is set up properly to reflect your changing profile. Here are some questions you should be asking to ensure you're on top of process:

  1. Do you have a formal review of your inbound, outbound, and storage profile every 90 days so that you can identify trends in your profile and how much has your profile changed?
  2. What percentage of your outbound orders now require each picking vs. case or pallet picking by customer?
  3. Are there any changes you need to make on your packaging or content of product inside the master carton in order to make it more small parcel and each picking friendly?
  4. Are your warehouse hours of operations supporting the volume now required for same day shipments?
  5. Have you identified a realistic and achievable cut-off time for same day order processing?
  6. Does your WMS allow you to perform bulk picking of orders to achieve maximum productivity vs. having to fulfill each order line by line?
  7. How often will you send (wave plan) orders to the warehouse floor for picking, now that order volume is higher?
  8. Do you need to add any type of capital equipment or automation, such as flow racks or conveyors, in order to achieve higher productivity?
  9. Do you need more active picking locations on the bottom level?
  10. What is your SKU count and will you be introducing more SKU's?
  11. Do you need more wire decking to accommodate storage of higher SKU counts or product with less than full pallet quantities?
  12. Are you performing slotting where you identify complimentary products that typically ship out together so they can be stored in the warehouse next to each other and improve picking productivity?
  13. Can you identify the "A" movers so they can be stored on the bottom level and the "C" movers on top?
  14. Do you need additional small parcel stations to accommodate higher small parcel volume?
  15. Are you working with the small parcel carrier to drop equipment and get the latest possible time for pick-up?
  16. Do you need more floor space in the picking area or small parcel area to accommodate higher each picking?
  17. Have you established a min/max and minimized costs for corrugated supplies?
  18. Do you have proper forecasting tools to share with the warehouse so they can plan their labor to accommodate peaks and valleys?
  19. Have you identified order patterns so you can determine peak and off-peak days or times of year?
  20. Do you have key performance indicators (KPI's) to effectively monitor and measure your on-hand inventory accuracy, dock to stock, on-time outbound shipping and fill rate accuracies?

This leads us to the final (and most important) stakeholder in this discussion – the customer. The customer has no idea and does not care who has shipped their order and where the product has shipped from! All the customer cares about is that they get the right product at the time they were promised to receive it. This is an Amazon world we now live in. Typically two to three days from the time they order and 100% accuracy is their expectation. At the end of the day, being proactive is the difference between a successful transition toward drop shipping and a failed one.


Scott is a 20 year veteran of the 3PL industry and 13 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.

CLICK HERE to return to the AUGUST 2016 RVCF LINK

Tags:  3PL  Drop Ship 

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Ask a 3PL Expert: Combining Same Destination Shipments

Posted By Administration, Thursday, May 12, 2016
Updated: Wednesday, May 11, 2016



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
Our trading partner expects us to ship only once per week and we're doing that; however, the 3PL is supposed to be compiling the shipments for all vendors shipping to the same destination and also complying with this. As such, we're being held accountable for it. What can we do in this situation?
-Jeanne, Los Angeles

The answer to part of your question is very simple, but the other part is much more complex. A 3PL should definitely be held accountable for following any routing guide requirements, including shipping out once a week to the retailer. However, a 3PL should not be held accountable for compiling shipments for all vendors shipping to the same destination.

In your scenario and in a perfect world:

  1. You the customer would transmit orders to the 3PL.
  2. The 3PL would compile your orders with all the other orders from their other customers shipping to a specific retailer to a specific DC.
  3. 3PL would build full truckloads to that DC.
  4. 3PL would route the orders.
  5. Carrier would come in and pick up the full truckload with multiple vendors inside.

Although this is possible, in most cases, it is not reality. There are several variables at play:

  • In a shared warehouse environment, a 3PL generally handles customers of all sizes, product, and volume.
  • Chances are the day your shipments are picked up is different from the day other customers are picked up.
  • The volume you are transmitting is higher or lower than the others.
  • Perhaps your product ships out floor loaded while other vendors ship out on pallets.
  • Another vendor might ship direct to store while your product ships to DC locations.
  • DC's receive may receive more product from one vendor and less from another.

That being said, your goal has great merit and we have seen it work before. Here is one example of how it worked:

  • Customer A ships out to a big box retailer every Friday
  • Customer B ships out to that same big box retailer every Thursday

On their own, they do not have enough for full truckloads to each DC, but you could work with the 3PL, the retailer, and the other customer(s) to move up the shipping day for Customer B to Friday so they can both ship out from the 3PL facility on the same day, giving you the biggest opportunity to build as many full truckloads as possible.

The benefits of this program and what you are after are:

  • The ability to bypass the consolidator and go directly to the DC. This saves money for the retailer as they don't have to pay for stop-off charges or the consolidator.
  • The ability to minimize pick-ups at the DC by the retailer. Before it might have been three separate LTL loads; now it might be one full truckload.
  • Bypassing the consolidator increases your time to market by at least 24 hours, but as much as 72 hours.
  • Consider a truckload leaving on a Friday morning. The consolidator is generally closed on the weekends so they would work the truck on the Monday versus having the truck leave directly to the DC on Friday.
  • Labor productivity is always higher for a 3PL when they can consolidate product, build load full truckloads, and reduce trucker pick-ups. Increased productivity could lead to rate reductions.

The key is collaboration. Contact your retail trading partner and propose a plan of action. Doing so can help you be viewed as a strategic trading partner and a valued supplier.


Scott is a 20 year veteran of the 3PL industry and 13 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.

CLICK HERE to return to the MAY 2016 RVCF LINK

Tags:  3PL  Shipment Consolidation 

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Ask a 3PL Expert: Visibility

Posted By Administration, Thursday, April 14, 2016
Updated: Tuesday, April 12, 2016


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
Sometimes we feel blinded by what our 3PL is doing. What kind of visibility should a 3PL be providing in terms of document sharing, exceptions, etc.? Are 3PL's providing this information online?
-Katie, Boston

The most important thing to keep in mind in a 3PL relationship is that the 3PL legally does not own the product. It is your product that is being stored, your product that is being handled, and ultimately your product that is being sold to the consumer. So the 3PL has an obligation to provide you with all information when you need it and how you need it.

In fact, these days it is very common for a 3PL to feel as though they are in the technology business more so than the warehouse and distribution business. That being said, there are thousands of 3PL's out there, ranging from mom-and-pops that use Excel spreadsheets to manage all the way up to sophisticated 3PL's that use robust multi-million warehouse management systems and operate a high number of DC's.

Sometimes in business you get what you pay for. We have seen many instances where the 3PL does not have an IT department and/or the resources to provide all of the information online and in a real time manner, but the rates the customer is paying are way below market price. Some customers are fine with that – they don't need all the bells and whistles, they just want the lowest rate.

Assuming you desire to utilize a reputable 3PL and are paying fair market prices, you have every reason to expect real time reporting, online access, or auto e-mailing for critical report information such as on hand inventory, pending orders, shipped orders, routed orders, exception reports, and inventory adjustments. These are just some of the most basic reports that any reputable 3PL should be able to provide to you. In short, you should get what you want, when you want it, and how you want it.

In addition to technology, the second business a 3PL will tell you they are in is the communication business. A proven and methodical account management process is crucial to success in any 3PL relationship. Any reputable 3PL will already have a process in place for weekly reviews, quarterly reviews, and annual reviews so you can make sure you address any concerns in a timely manner before small problems become big problems. If an account management process is not in place than you need to put one in right away – after all, a 3PL customer should never blindsided.


Scott is a 20 year veteran of the 3PL industry and 13 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.

CLICK HERE to return to the APRIL 2016 RVCF LINK

Tags:  3PL  Visibility 

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Ask a 3PL Expert: Prepping for the Future

Posted By Administration, Thursday, March 10, 2016
Updated: Wednesday, March 9, 2016


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 are a seasonal importer of outerwear. My 3PL got slammed last year and could not keep up with our order volume. What can we do differently to make sure this does not happen again?
-Eric, Philadelphia

In a perfect world, inbound volume and outbound volume would flow the same every day, every week of the year, but the reality is that we live in a world of flash website sales, Wal-Mart and Costco blowout promotions, and seasonal product where there are many peaks and valleys.

To better prepare for future orders, you should look at these areas:

Planning – This process should begin as soon in advance as possible. The more notice and forecasting you give the 3PL, the better they can plan. Forecasts should be updated on a monthly basis or as more meaningful information becomes available. Advanced planning time can range from having retail program purchase orders written months in advance to the marketing department deciding on a flash sale the day before.

Minimum Square Footage – The warehouse needs to set aside at least the minimum square footage they need to support your business. They also need to have a clear understanding of what the average and the peak footprint is so they do not sell that space as it will need to be available to handle those peaks. Additionally, you need to make sure you sit down with the warehouse to review this together.

On Water Report – It is critical for the 3PL to know what is due in over the next week or two. You should send this information to the 3PL at least once a week and, during peak season, every day. Hot containers should be highlighted so they can be prioritized and picked up from the ports first.

Daily Calls – During peak season you should set up a brief call to review the inventory, shipped orders from yesterday, and pending orders for today. Intervention should take place as needed for any carriers that are not showing up as scheduled.

Labor Management – The 3PL should balance labor based on demand for the day. Hours should be extended if needed during peak season, ranging from multiple shifts and extended hours to operating seven days a week.

Transmission of Orders – Once product is received into inventory and is allocable, it is best to send the orders over as soon as you have them so the 3PL can begin processing them in their system.

Pack and Hold – Shipments that are packed and stored away in a particular pallet location to be retrieved on the actual shipping day are known as "pack and hold" shipments. This practice is critical for the warehouse to even out their labor. Orders to be shipped in the future can be packed in advance. For example, during certain seasons, orders may be placed in bulk. In such cases, the shipments are picked and packed in advance to avoid overload on the actual shipping day.

Routing/Carrier Coordination – For retail orders, every effort should be made for the carrier to pick-up on the first shipping window. For D2C, orders should be processed and ready to ship within no more than 24 hours. For high volume programs, coordination for dropped equipment should take place well in advance with the carriers.

Reports – Three reports at should be provided to the 3PL regularly are:

  • On hand inventory
  • Pending orders
  • Shipped orders

These three reports are critical in order to keep the team focused on success.

Post Assessment – Once the peak season has come down, the two parties should sit together to review what went right and what could be improved.

By making necessary adjustments and streamlining processes, orders should flow through with greater ease.


Scott is a 20 year veteran of the 3PL industry and 13 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.

CLICK HERE to return to the MARCH 2016 RVCF LINK

Tags:  3PL 

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Ask a 3PL Expert: What Are My Rights?

Posted By Administration, Thursday, January 14, 2016
Updated: Wednesday, January 13, 2016


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 are trying to determine what right, if any, our 3PL has to our goods when it is at their distribution center.
-Carlos, PA

In a 3PL relationship, the customer desires to engage the 3PL to provide the transportation, storage space, material handling facilities, and personnel necessary to receive, store, and ship the customer's goods. The 3PL desires to provide the transportation, storage space, material handling facilities, and personnel to provide the services desired by customer.

All of the goods stored at the facilities or otherwise in the possession at the 3PL facility remains the property of customer. The customer should name itself as the consignee on each shipping document related to the goods, including, but not limited to, any bill of lading, and will name the 3PL, if at all, only as the "in care of" party. The 3PL should not at any time claim any right, title or interest in or to any of the goods or sell, pledge, loan, part with or otherwise transfer possession or any other interest in the goods or suffer any claims, encumbrances or liens.

There is a scenario, however, where a 3PL can stop shipping the goods – when a warehouse operator believes it is owed storage and handling charges from a customer. In this case, the 3PL will often assert that it holds a "warehouseman's lien" over the customer's goods stored in the warehouse. A classic example of a 3PL asserting their warehouseman's lien would be when a customer decides to move out of the 3PL. The 3PL would tell you that if they were to ship out all the product prior to having all final payments made, they would have no leverage to make sure they got paid for the pending invoices.

As an example, assume the customer moving out has 1,000 cartons left at the warehouse. The landed value of the goods in each carton is $10 so the total landed value of the good is $10,000. The pending invoices owed by the customer to the 3PL total $10,000 By asserting a warehouseman's lien, the warehouse operator is making sure the value of the goods at the warehouse is the same or more as the value owed to them in the event the warehouse operator has to sell the goods if it is not paid.


Scott is a 20 year veteran of the 3PL industry and 13 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.

Tags:  3PL  Warehouseman's Lien 

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