Third party warehouses (or a 3PL) play a vital role in shipping product to customers, so receiving an abrupt move-out notice from your logistics provider can be terrifying! When this happens, your business strategy is disrupted and and your primary focus must ship.
It is time to go into problem solving mode and avoid your operations stopping in their tracks. First, evaluate the current situation and your immediate needs. Then think about the long-term and execute a supply chain plan that closes the gaps.
In this article, we aim to give you tools to knowledge and tools to use in finding your next, best-fit 3PL warehouse provider.
Table of Contents
- Why does a 3PL warehouse kick out clients?
- Questions to Consider before finding a new 3PL partner
- Execute Fast: Plan around the move-out schedule
- Comparing third party warehouse costs
- Bringing it all together
Why does a 3PL Warehouse Kick out clients?
There are a lot of reasons a 3PL warehouse may end relationships with clients. Most of which are, unfortunately, outside of the Client’s control.
It’s important to remember 3PL companies are looking at each account from, minimally, a business perspective and a human-relationship perspective.
Here are a few common examples 3PLs may kick clients out of their warehouse space and discontinue services:
- The 3PL is no longer offering services you require such as EDI support.
- An account minimum ($) monthly payment is created by the 3PL that is more costly than your average monthly warehouse bill.
- The 3PL has outgrown, changed or reevaluated their previous pricing strategy.
- When this happens, a smaller account may deemed unprofitable or less profitable.
- At times, new opportunities are available to 3PL warehouses. These are opportunities allow more profitable work to be done in the space where your pallets are stored today.
- This has nothing to do with your business, rather it is telling of the 3PL’s business goals.
- Your goods were not as described and put the 3PL at risk of liability for unsupported conditions, such as sending HazMat goods to a non-HazMat warehouse.
There are countless reasons a 3PL warehouse kicks out clients or takes action to force clients to move their goods. This is the unfortunate truth of some 3PL businesses.
Don’t focus too much on why your current 3PL provider issued their move-out notice to you. It is most important to move forward and find your new, better fitting logistics partner.
Questions to Consider before Finding a New Third Party Warehouse Partner
When shopping for a new warehouse partner, it is important to know what features you require, what you don’t need and approach some aspects of the supply chain from a blank slate.
These simple questions can help identify key features required and opportunity for improvement in your supply chain.
(1) What features do I have today that I cannot live without?
You’ll want to make sure you’re next warehouse offers these same benefits!
(2) What pain points exist today?
These gaps should be mended with your new warehouse service provider.
(3) Can I reduce the Op Ex of my supply chain?
Look at the flow of goods through your supply chain from manufacturing to customer. Where is there waste?
Before diving into researching your next third party warehouse, taking time to reflect on the current state and future state can add immense value.
For more help tips about planning your requirements before reaching out to a third party warehouse, checkout this article about creating a detailed scope of work for fulfillment centers.
Execute Fast: Plan around the Third Party Warehouse’s Move-out Timeline
After determining your needs and goals with a new third party warehouse partner, it is time to get busy. Likely, your current 3PL gave you a move-out deadline that is right around the corner. No worries, you can find fast-moving partners.
Firstly, find several 3PL options to contact. Start with any warehouse companies you or friends have worked with in the past. Do a few Google searches based on your main requirements. Also consider looking for an affiliate warehouse network to help you find the right warehouse provider.
When you contact 3PLs, let them know a bit about your requirements and what services you need. It’s important to vet warehouses early to try to avoid partners who are not able to meet your requirements, such as lacking eCommerce integration or Amazon Replenishment expertise.
Unfortunately, this process can be very frustrating. Many warehouses will not even reply to your emails, or they do not have space available or they lack important capabilities you require. Don’t get discouraged! Keep researching and ask each warehouse for recommendations as to who may be able to help you.
The 3PL warehouse industry is very close-knit and word of mouth networking can often get you to a solution fast.
Once you find and vet a handful of qualified 3PLs, you can explain your full needs to each warehouse and get a quote.
Compare the cost, service offerings and benefits offered by each company before selecting your new 3rd party warehouse partner.
Comparing Third Party Warehouse Costs
Comparing 3PL costs across quotes is a very detail-oriented process. It is a critical decision that will impact your customers and your operating expenses significantly in years to come.
To make the most informed decision, you should calculate the cost of each “job” the warehouse will perform for you. Then ask the sales-rep at each warehouse if you correctly understand all fees involved.
Don’t forget to ask about hidden monthly or transactional fees! You don’t want any surprise fees on your first invoice.
This cost comparison process can be time consuming and confusing. For a walkthrough of how to compare 3PL costs including a free Excel template, read this detailed article.
Bringing it all together
Receiving a move-out notice from your current third party warehouse provider is an opportunity to turnover a new leaf and find a partner that better fits your needs. The most important action to take is finding a new warehouse partner before your move-out date.
Start by evaluating your “must-have” versus “nice-to-have” requirements for your 3PL partner. Then find several third party warehouse vendors who appear to offer all services you need. Contact each warehouse to get rates. Compare the costs, benefits and cons of each warehouse.
Finally, select your new third party warehouse partner and plan your move-in date.