Understanding Service Levels in Third-Party Logistics

Looking at new 3PLs? Ask them who runs their demand planning and how! If you're evaluating a new 3PL, don’t just tour the warehouse and nod at the tech stack. You need to ask, “Who’s actually helping me stay in stock without going broke doing it?” Because that’s what separates good from great. You want to know: → Do they have someone watching your inventory levels daily? → Can they explain how they handle high turn vs slow mover SKUs? → Do they track lead times and reorder points with real data not gut feels? → What happens when a forecast is wrong? Do they fix it, or do you find out in a CS ticket? → Are they proactive, or do they wait for panic mode? A good demand planning team is your early warning system. They’ll tell you when you’re at risk of stockouts, flag weird velocity shifts, and help you plan promos without running your ops team into the ground. A bad one? They’ll wait until it’s too late and hit you with “we didn’t get the PO in time.” That means you become the demand planner. And if you wanted that job, you'd have applied for it. The best 3PL’s are thinking 3 steps ahead with you. So if you're shopping around, make sure they can actually plan, not just pick and pack.

Two areas that hold massive influence over the educated buyers mind during a 3PL RFP: 1. The ability to speak to *current* satisfied customers that occupy a similar niche or product profile as the buyer 2. The ability to point to data-backed SLA's around order accuracy, shipping accuracy, fulfillment time, inventory slippage, customer service response time As a seller, consider this the sleep-at-night insurance your buyer wants to see in order to feel comfortable making a big decision for their company. Every 3PL can wax poetic for days about how great their service is Very few can actually show and tell with referrals and data

Most DTC brands focus on the top of the funnel—traffic, conversions, and sales—but ignore what happens after. And more often than not, 3PLs are the weakest link in delivering your brand promise to customers. Here is how you should measure your 3PL performance to deliver on your brand promise and keep customers coming back. 1️⃣ Shipping Speed: Timely deliveries are crucial for customer satisfaction. Track on-time delivery rates to ensure your 3PL partner meets your expectations and keeps customers happy. 2️⃣ Shipping Accuracy: Accurate order fulfillment enhances customer trust. Monitor order accuracy metrics to minimize errors and returns. 3️⃣ Cost Efficiency: Efficient 3PL operations reduce logistics costs, improving your bottom line. Measure cost per order, transportation costs, and warehousing expenses to identify areas for optimization. 4️⃣ Service Level Agreements (SLAs): Clearly defined SLAs with your 3PL provider are vital. Regularly assess their performance against SLAs to maintain accountability. 5️⃣ Operational Flexibility: Can the 3PL manage peaks in order traffic? Or do their processes break down during BFCM? 6️⃣ Technology and Data Analysis: Prioritize 3PLs that provide transparency through technology—easy API integrations and ongoing communication channels. 7️⃣ Customer Experience and Communication: Don't overlook customer feedback—gather post-purchase feedback directly from the customers. It's a valuable source of information about the quality of your 3PL partner's services. I talk about our 7-point framework in more detail here 👉 https://lnkd.in/grSRcQ2p