The short answer is yes—the minute you realize your current fulfillment provider is holding you back. Your fulfillment operations are one of your largest line-item costs, and their smooth operation is critical to your business. Putting off the switch from a faltering operation could cost you more in the long run. But we all know it’s a little more complicated than flipping a switch.
Switching your DTC fulfillment to a new 3PL requires months of planning, preparation, and technological integrations. Just the thought of trying to move your inventory to a new facility without disrupting your e-commerce business is stressful. No one looks forward to the process. But you can’t afford to ignore the signs that it’s time for a change. So how and when do you start?
First, Find the Perfect Partner
The first step to choosing a new fulfillment center is determining what didn’t work with your current provider and what you need from your new partner. Take a look at the different levels of logistics providers, from 1PLs to 5PLs, to make sure you’re looking for the right type of company. Gather input from all stakeholders, while maintaining objectivity about your own inefficiencies and opportunities for improvement. Whenever possible, use data to help prioritize needs over wants.
If you need somewhere to start, here are 7 things to look for when choosing a fulfillment center. Figure out your must-haves, and look for a partner that can fulfill them—pun intended. Once all stakeholders are on the same page, you can begin the vetting process. Depending on the size of your company, you should start the vetting process 3-6 months prior to your desired completion date. For large companies with lots of stakeholders and formal RFP processes, the vetting can take much longer.
The next step is hammering out a contract with your new 3PL that establishes goals and expectations. It should include your requirements for orders, inventory and special services, as well as expectations regarding time frames and reporting. The best fulfillment companies will collaborate on specific service-level agreements (SLAs) that will govern your entire relationship.
Finalize Technological Integrations
Your merchandise cannot be moved until your order, inventory, and payment systems are fully integrated with your new 3PL’s warehouse management and reporting systems. Your products are then loaded digitally into the new WMS platform, ensuring that their receiving department knows what to expect before inventory arrives.
Choose a Migration Strategy
Your new 3PL will help you determine the best way to handle the actual migration, how to stagger the inventory being moved, and help you create a roadmap for the transition. Most companies choose one of 3 strategies for migration:
- A hard switch, during which service shuts down in the former 3PL and starts up a few days or weeks later in the new 3PL
- A transition period during which both 3PLs are filling orders until the new 3PL is up and running
- A longer time period where the new 3PL accepts all new inventory while the former 3PL depletes existing inventory.
Your choice of migration strategy, along with the number of SKUs involved, and closing terms with your former 3PL will all determine how much time the actual transition will take. Once all this is nailed down, it’s just a matter of deciding when to make the switch.
Set A Timeline
On average, it takes about 1-2 months to complete a migration and, generally, the larger the company the longer it takes. Naturally you should avoid migrating during peak sales season or large promotions. Ideally, the process will be completed far enough in advance of peak season to give your new 3PL time to iron out any kinks. Be transparent with your new 3PL about goals and set realistic expectations, so neither of you is taken by surprise.
Clearly, there is no perfect time to switch 3PLs, but putting it off won’t make it any easier. What will make it easier is finding a 3PL that understands your needs and has the resources and experience to ensure a smooth migration.
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!