Onboarding with a new 3PL: Best practices for successful implementation

[Updated post from July 28, 2022]

The onboarding process when you start a new job can be nerve-wracking. It's no different when you're onboarding with a new 3PL.

Even if you've worked with a 3PL before and are familiar with the onboarding procedures, every fulfillment provider will have its own processes that can cause confusion or delays to your operation going live. Even a minor issue with integration or problems with receiving inventory on time can derail the opening stages of your transition, which doesn't set your 3PL relationship off to a positive start.

A 3PL onboarding is the same as preparing for any big project; it all comes down to thoughtful preparation and planning. No matter whether you are entering into your first 3PL partnership experience, this article is a resource to help brands understand what onboarding with a fulfillment provider entails and how you can prepare to make this transition as seamless as possible.

The nine steps below will help you identify the key parts of onboarding to be aware of and plan for. Using these guidelines will increase the likelihood of a successful onboarding – and help you to sleep a little easier at night!

Part I: Pre-onboarding

1. Success starts with the right sales process

Always remember that you are the only one who understands the full scope of the fulfillment services you require, such as:

• Expected order volume
• How many warehouses you need
• Inventory management requirements
• A Warehouse Management System (WMS)
• Custom rules for packing orders
• Optimizing shipping costs

It's your responsibility to communicate all relevant information to potential partners during the RFP process to make sure they can fulfill these needs – and at a price you can afford.

Make sure to draw up a detailed project plan and list of requirements and see to it that the fulfillment partners currently in consideration can meet at least the essential functions you require for your business model.

If you have any questions about the ability of a logistics company to meet your requirements, make sure they are resolved before signing an agreement. If you aren't sure what you need to ask, check out our list of 21 questions to ask a new logistics provider to help get you started.

2. Check pricing and benefits

Remember: Everybody wants to save money – including your fulfillment partner. Pay extra attention to the total fulfillment cost listed, and double-check that you understand what each fee does or doesn't include. If the cost is higher than expected, perhaps extra services are included - or the price has been inflated due to additional information being disclosed.

It's not uncommon for new clients to be presented with compelling pricing to ensure a successful onboarding process. But a logistics provider will often build in price increases and automatic contract renewals to help them offset increasing running costs in future years. Keep an eye out for these types of clauses — and make sure you have a clear understanding of what they mean for your business.

If you're comparing price proposals from multiple 3PL providers, each of them has likely priced their fulfillment services differently. Understanding these differences will be critical to your analysis and appreciating the financial impact of each offer. It's a good idea to get an understanding of common fulfillment pricing models to get a sense of how order fulfillment costs work.

3. Make sure the contract aligns with commitments made during the sales process

As the old saying goes, always make sure that you get everything in writing. If you and your new logistics company have agreed to something in the sales process that has made them a top prospect, whether that's extra storage space in your fulfillment center during the seasonal rush or staying below certain error rates, ensure that it's clearly understood by both parties and documented in the agreement you sign. Otherwise, it may be challenging to require your logistics partner to perform an extra fulfillment service that wasn't properly documented.

Part II: Getting ready to transfer inventory

4. Connect with your transition team

Every step of 3PL onboarding is important, but this one is vital. After all, these are the people tasked with making sure your transition to your new 3PL is successful.

Your transition team should include:

• Operations leaders from your company
• A dedicated project manager
• The account manager from your 3PL provider
• Representatives from your product suppliers.

Your 3PL will ideally assign a dedicated project manager and account manager to manage the entire onboarding process. Keep in mind that your 3PL's organizational structure may be such that your project manager is overseeing multiple onboarding projects at once. If this is the case, ask how much of their time your account will be receiving every week and determine a meeting schedule to ensure good communication and that timelines are being met.

Suppliers are not always considered a part of the onboarding process, but they are a critical link in the transition. At a minimum, you will need to coordinate with all of your suppliers to reroute future orders and ensure compliance with your 3PL's receiving requirements. This is also a good time to evaluate some supplier service costs (e.g., kitting, barcoding, assembly) if these value-added services are provided more affordably by your new third-party logistics provider.

5. System integration and configurations

When you receive orders from consumers or wholesalers, these orders need to be passed along quickly to your logistics provider for processing. Many businesses will use ecommerce platforms like Shopify or Magento, an Enterprise Resource Planning (ERP) system, and an EDI solution. It's critical to understand how to effectively integrate these platforms with your 3PL's tech stack for seamless order processing and inventory updates.

There are many ways that a 3PL can receive and pass back information between systems. A common approach is to use an API (Application Programming Interface) to exchange information via open-source programming. A technology-led supply chain partner will normally offer a suite of pre-built integrations with key platforms, which speeds up onboarding significantly.

Other important points include understanding what your new logistics company offers in terms of a warehouse management system, and the corresponding cost for this work to integrate it with your custom in-house systems, if you have any.

Some 3PLs may charge a one-time integration fee as part of the onboarding process, while others may charge a smaller, recurring monthly fee to pay for this work and any ongoing updates or maintenance that are required. It's worth noting that configuring integrations can add significant complexity to the 3PL onboarding process, so make sure that you understand how this will affect the timeframe for your operation to go live.

6. Prepare your inventory for shipment to your logistics partner

Preparing your SKUs for shipment to your supply chain partner is often one of the most time-consuming parts of the onboarding process. Depending on your SKU count and the number of units you currently have in stock, this work can span anywhere from a few days to several weeks. 

One of the biggest advantages of moving inventory is that it provides an opportunity to rationalize your SKUs by removing slow or non-moving items. After all, there's little point in incurring labor, transit, and storage expenses for products that you are unlikely to sell shortly.

Utilizing an ABC methodology is a great way to make sure that your “A” movers are accounted for first. This ensures that you have popular inventory readily available for picking while the transition is happening – and immediately upon your 3PL going live. This type of methodology can also help you streamline your resources and effectively manage your labor cost during the transition.

It's critically important that you work closely with your logistics provider to ensure that inventory is labeled, packed, and palletized according to your new partner's inbound routing requirements.

This allows your 3PL to efficiently and quickly receive your product and get it ready for sale, thus shortening the transition period. It's reasonable to expect your 3PL to be flexible with their inbound routing requirements during the onboarding, as they know it can be complex to transition your inventory to them. 

This transition can be tricky, as it relies on the partner you're leaving being cooperative with your needs. Unfortunately, some 3PLs aren't as professional as they could be when they realize they are losing a client.

The better job your current fulfillment partner does, the better, easier, and less expensive it will be for you and your new logistics partner to get off to a great start!

Part III: Before you go live

7. Place a test order - repeatedly

As your planned go-live date nears, excitement and nervousness will increase. A great way to minimize concerns is to make sure that comprehensive testing is conducted at least one week before your go-live date.

Testing should include:

• Receiving inventory (this can be product already in-house)
• Receiving test orders via your online store
• Inventory storage
• Pulling products to replenish pick areas
• Picking and packing orders ready for shipping

Another part of testing is checking the health of your integrations. It's likely that as systems were being integrated, a lot of micro-level testing was conducted. However, testing to prepare for “go live” is different in that it mimics placing orders and having those test orders flow through the pick, pack, and ship functions to ensure everything is working correctly and data is flowing between systems as required.

Thorough testing will allow you and your 3PL to identify errors or tasks that may have been missed or forgotten earlier in the onboarding process. Ultimately, comprehensive and detailed testing provides peace of mind and is an exciting measure of a successful start with your new partner.

8. Going live

Being onsite for the go-live moment is something you may want to consider as a new client, but be mindful of the stress and anticipation your logistics provider will be feeling. Decide if it is a good idea to be on-site on the big day, or to wait a week or two so your 3PL has time to work out any kinks that may arise in the first few days.

After the go-live date, you should have a full-time account manager assume responsibility for day-to-day communication with your team, while the onboarding project manager begins to phase out. The first few days will likely be full of activity, but after a few days, a routine will start to develop and a cadence will be established. 

9. Navigating the first 90 days

During the first 90 days, good communication is a must to make sure the full lifecycle of product manufacturing, inbound shipping, receiving, storing, picking, packing, shipping, and returns are functioning correctly.

You should also require a 90-day evaluation with your 3PL, as this is a great opportunity for both parties to debrief about the onboarding and the first few weeks of working together. If done correctly with an open mind, much will be learned during this review that can be applied in an effort toward continuous improvement and keeping your operation running smoothly.

Set yourself up for a successful 3PL onboarding with Ryder E-commerce

Choosing to transition from self-fulfillment to outsourcing, or moving to a new fulfillment partner, are big milestones that require careful consideration. The 3PL onboarding process can feel intimidating, but collaborating closely with your team and your top 3PL candidates is a great way to identify what your needs are and who is most able to meet them.

With a thoughtful approach and a knowledgeable team committed to a successful outcome, you can set up your business for a successful onboarding with a long-term, high-quality supply chain partner.

Ryder E-commerce is dedicated to supporting established and emerging brands with seamless, cost-effective fulfillment services. Our experienced onboarding and customer success teams are on hand to ensure that your onboarding process is running smoothly and sets you up for long-term success.

Don't just take our word for it!

“Efficiency is the best word I can think of to describe Ryder E-commerce. They were determined to get us to the finish line and completely understood our needs for such complex configurations. By partnering with Ryder E-commerce, we have more opportunities for growth than ever before.” Jon-Mark Craddock, Director of Logistics at Tuckernuck

“It was a very intense 60 days, especially from the standpoint of ensuring that our ERP and support systems were properly integrated with the Ryder platform and determining how much warehouse space we were likely to need. It was a massive shift to go from just one SKU to 200, but Ryder E-commerce handled it with true professionalism.” Steven Feczko, Senior Director of Operations at Hedley & Bennett

“The team at Ryder E-commerce did a fantastic job of taking a very complex process and presenting it as straightforward as possible. As a brand-new facility, the Columbus location was able to completely accommodate our needs. Ryder struck the perfect balance between keeping us in the loop so we felt confident during the transition and not bogged down with all the technical details.” Mary-Chelsea Banister, Senior Manager at Free Fly Apparel