Competition is fierce among ecommerce order fulfillment 3PLs. As a result, 3PL companies must proactively support two initiatives to remain viable in the marketplace: 1.) Protect and retain their existing customer base; 2.) Aggressively pursue new business opportunities.
These two initiatives become more important as we see the growth of ecommerce slowing and inflation eating away at profit margins. While the service providers must continue to do what they do best, they must also adjust to changing inventory/customer needs of both existing and new customers. In its simplest form, survival in the marketplace for an order fulfillment 3PL is about managing the inventory and adapting to customer’s inventory needs to keep and grow the business.
5 Ways to Adapt to Customer-Driven Inventory Needs
Be Flexible and Broaden Inventory Type/Product Processing Capability: We are seeing more order fulfillment service providers only supporting specific categories of inventory, which narrows their ability to capture new business.
These categories include:
- Smalls and packs.
- Medium size Box focus.
- Oversize products.
- Low value goods.
- Focus on products that only require extended delivery days capability.
Service providers need to broaden their capabilities and have the capability to efficiently manage more than a singular category of business.
- Employ/Invest in Flexible Pick Process Technology and Storage Capability: While advanced pick technology supports a more cost-effective and faster pick process, it can also limit the categories and size of products a merchant needs the service provider to support. It may be necessary to take a step back from advanced pick technology, and also support a manual pick process that may be needed to support fulfillment across multiple product categories.
- Cross-Train Operations Employees: Flexible operations labor models are critical to supporting one-off, customer required processing and pick solutions.
- Adaptable Floor Space: Flexible floor space models/capabilities are critical to satisfying changing fulfillment requirements and needs of ecommerce merchants.
- Support of Omnichannel Fulfillment and Distribution: In a constantly changing omnichannel fulfillment environment, order fulfillment service providers must be able to support the everchanging fulfillment and transit day requirements of their merchant customers.
While not all business is good business, order fulfillment service providers must have the flexibility to stretch with respect to a client’s fulfillment needs, and sometimes, that means taking on the distribution of less profitable, non-profile lines of products to satisfy the overall needs and requirements of a client.