Tendering for a 3PL fulfilment warehouse:
How to get the best partner to work with and act as your Distribution Centre

Evaluate your current logistics and fulfilment operations to identify pain points and areas for improvement. It’s good to share your issues with current situations, if you allow experts to look at the problems, often there will be solutions you were not aware of.

Determine the storage volume of orders, types of products, and any special requirements unique to your business.

Three main cost centres need documenting:

1. Storage requirement
2. Picking/Packing processes
3. Logistics/Distribution needs

Is there a timeline for the tendering process and contract length? Give clear guidelines for all involved to understand the project framework.

Create a list of potential 3PL providers based on their reputation, experience, and capabilities.

Look for providers with experience in handling similar industries or businesses. Case Studies and conversations with fulfilment providers are vital to assess working viability.

Google searches do not always provide the best partners. Paid-for advertising can cloud listings and only the wealthiest businesses will appear on your searches. There are plenty of forums and groups on platforms like Linkedin that will have experienced professionals and other like-minded people to help steer your partner shortlisting.

Develop an RFI document to gather basic information from potential 3PL providers.

Include questions about their experience, facilities, technology, scalability, processes, compliance, case studies and customer references.

Staff training programs and contact processes for daily workflow are also good to know about so your business can map how to escalate daily questions, issues and problems when they arise.

Based on the information gathered in the RFI, create a detailed RFP outlining your specific requirements and expectations.

Include details such as service level requirements, performance metrics, technology integration, reporting and data export. Contractual terms and communication expectations.

Organise visits to the facilities of shortlisted 3PL providers to assess their capabilities firsthand. This may not always be possible if you are based offshore so ask to see images and video footage of picking stations, picking shelves and pallet spaces to get a good understanding of where your stock will potentially be processed.

Evaluate partner's infrastructure, technology, security measures, and overall operational efficiency. You may have specific requirements with Organic certification or alcohol licenses. Make sure you understand what your business needs to trade legally and conform to all regulatory standards.

Clearly define any technical requirements, such as integration with your e-commerce and marketplace platforms, real-time inventory visibility, and data security protocols. Online Warehouse Management Systems (WMS) are commonplace, but make sure you and your staff have the ability to view the right levels of information and export data directly or through integration to help your daily workflow.

You need stable online processes that integrate directly into all your channels. Understanding uptime and protocols in case of outage need to be mapped to plan for emergencies.

Request a detailed breakdown of costs, including setup fees, transaction fees, storage fees, and any other relevant charges.

Ensure there is transparency in pricing and no hidden costs. You need to be able to break down each order to assess profitability and understand the nuances of order scale if promotions and marketing campaigns are run.  We see a lack of understanding with packaging rules as well as bundling and kit-building products prior to campaigns starting or during the increased exposure.  This, if planned correctly could increase profits significantly.

Clearly defined SLAs that outline the expected performance levels for key metrics, including order accuracy, order processing time, and shipping speed. Most providers will operate with a dispatch guarantee. But understanding that this is usually a ‘best endeavour’ means that you need to have a good relationship with your chosen 3PL provider to manage the client expectation.

Most will staff and manage the order output workflow correctly as long as they know your order numbers and expectations.

Specify the terms and conditions of the contract, including the duration, termination clauses, and any penalties for non-compliance.

This is a two-way agreement. You are contracting a supplier to work on your behalf. So as much as you have expectations for your order output your partner has overheads, processes and business frameworks that will naturally create restrictions. So work together to find a happy working relationship.

Ensure that the 3PL provider complies with relevant industry regulations and standards.

Discuss security measures for the protection of your inventory and sensitive data.

Request references from current or past clients to assess the 3PL provider's reliability and customer satisfaction.

Review case studies showcasing successful partnerships with businesses similar to yours. Remember that you wouldn’t ask your enemies for a reference and not all business relationships that end badly mean they are not worth talking about especially if the knowledge and experience is valuable to your business case. This is a working partnership in the planning. If the right questions are asked you may even learn from past situations and both parties can grow from it. Business Counselling in full effect.

Establish a scoring system to evaluate the proposals received from 3PL providers objectively.

Consider factors such as cost, experience, technology, ability to scale and cultural fit.

Engage in negotiations with the selected 3PL provider to finalise terms, pricing, and any specific contractual details. Both parties will benefit from a full understanding of direction and what is expected to achieve the common goal.

Once negotiations are complete, review and finalise the contract with legal approval to ensure all aspects are covered and both parties are protected.

By following these steps, you can create a comprehensive and structured approach to tendering for a 3PL fulfilment warehouse that aligns with the specific needs of your business, ensuring a successful and mutually beneficial partnership.