3 Strategies for Migrating Inventory to a New 3PL
So you’ve made the decision to break ties with your fulfillment provider and switch to a new 3PL. Take a second to pat yourself on the back. We know that’s not an easy decision for any eCommerce business to make. In past articles we’ve looked at some of the signs that it’s time to change your 3PL, and tips for finding the right fulfillment partner. Today, we’re going where the rubber meets the road: the actual migration. There are a lot of moving parts in a transition of this magnitude, but we find that our clients’ biggest concerns are about the actual, physical move—how to get their inventory out of its current (and potentially hostile) warehouse and set up in a new facility with the least amount of disruption to their business. Several factors come into play here, including:
- Number of SKUs
- Existing agreement with current 3PL
If you’ve done your homework, you’ve chosen a new 3PL partner that will guide you through this process every step of the way. There are a few different ways to go about the big move, so it’s a matter of choosing the strategy that keeps your sales and fulfillment operations flowing smoothly throughout the transition. Most companies employ one of the following three strategies:
Strategy 1: “Hard Switching” from Your Previous 3PL
With this approach, you go cold turkey. You remove all of your inventory from your current 3PL and ship it to your new fulfillment center(s) in one fell swoop. During the time it takes your merchandise to get packed, shipped, and through receiving at your new 3PL, you will not be able to fill orders. The length of downtime will be determined by SKU count, complexities such as labeling and packing to meet your new 3PL’s guidelines, and the speed of their receiving process. As a result, this strategy often works best for merchants with smaller order volumes and quick, simple receivings.
Strategy 2: Sending Inventory to Cover a Transition Period
In this case, you ship some of the inventory from your current 3PL to cover a transitional period. For example, you might ship 50% of each SKU quantity, or a specific group of products. In the meantime, you continue to fulfill orders from your current 3PL. Once you have enough inventory at your new 3PL to ensure uninterrupted service, you transfer the remaining inventory. This is a great approach if you’re looking to minimize business downtime by providing fulfillment wind-down and ramp-up paths. The downside of this approach is that managing and paying multiple fulfillment and storage providers can be costly.
Strategy 3: Shipping New Inventory Directly from Suppliers
With this option, you continue to fulfill orders with your old 3PL until you fully deplete your existing inventory. When new inventory becomes available, whether through stock replenishment or new product launches, you ship it directly to your new fulfillment center for incorporation. This strategy is a great approach for merchants looking to save money on transitioning with no expected downtime. However, it can be a more difficult option for brands with a high number of SKUs or brands that need to switch their fulfillment vendor under strict timelines.
Taking the Plunge
No matter which strategy you choose, make sure your team is familiar with your new 3PL’s receiving guidelines pertaining to labeling, packing, and pallet size. Most importantly, provide these guidelines to your former 3PL to avoid compliance issues and costly delays. Your new 3PL may also be able to arrange inventory pick-up rather than relying on your former 3PL to manage it. Your new partner may also be able to help you divert shipments already in transit, as long as receiving guidelines are met. Of course, before any of these strategies can be implemented, a lot of prep work has to be completed: onboarding with the new warehouse, integrating technology, entering your products into a new system . . . But that’s a topic for another blog post.
Do you have questions about migrating your business to a different 3PL? The onboarding team at ShipMonk is well-versed with this process and here to help; contact us today!