Companies have to ‘keep the main thing the main thing’
Direct-to-customer retailers choose to outsource because of the third-party fulfillment industry’s ability to provide overall fulfillment expertise and scalability, quick implementation time, variable service fee structure, and an established operating infrastructure.
Once you make the decision to outsource, the next step is to find the best possible 3PF match for your business. In order to conduct a successful search, allow sufficient time for the process — typically 90 days. You should provide potential vendors with sufficient detailed information with which to bid. Next, narrow the number of potential providers to a manageable few, visit finalists’ facilities, and choose the 3PF that combines value, stability, and the specific experience to fit your corporate needs.
The difficult part comes once you have completed the 3PF search and selection process and selected a vendor. Not to be trite or cliched, but the relationship between direct marketer and vendor must be that of close partners. This approach continues during the vendor selection process and builds from the implementation phase through the life of the relationship.
In the beginning
This is a time during which the vendor and the client work through all start-up issues and the foundation for the future client/vendor relationship is established. The initial phase is the first, and best, opportunity both parties have to develop an open, mutually beneficial dialog with each other.
Implementation typically takes about 90 days. Tasks you should address at this point in your partnership with the 3PF provider include the following:
- Finalize order processing software modification and reports requirements.
- Configure the warehouse.
- Set up the call center.
- Train associates.
- Develop business rules.
- Establish clear channels of communication.
Time is short, so it is imperative that you put into place a start-up process and organization that are both cooperative and efficient.
In its simplest form, the implementation group structure consists of a key contact person from both vendor and client and a support group within both organizations that is staffed with people able to resolve implementation issues quickly. During the implementation phase, you should plan to have representation on-site at the vendor location two to three days a week.
The key to a successful implementation is to understand that unless there is a free flow of accurate, timely information between vendor and client, there will be problems not only with the program launch but also with the long-term success of the relationship.
I have seen many a budding partnership turn sour because issues pertaining to the contract drag on. The best advice I can offer is to get the contract finalized and get on with the work of making the business successful.
Out of the blocks
If the foundation of a positive client/vendor relationship is laid during implementation, the actual launch of a program cements the relationship. Typical 3PF organizations assign a client services manager to facilitate the flow of information between client and vendor. In the most effective partnerships, the client will have a structure in place that mirrors that of the provider.
The first three months of an outsourcing relationship are the most taxing for the partnership. This is the time to establish procedures and protocols for ongoing, effective communications. Once order flow begins, along with all the activities associated with entering, shipping, and reporting orders, daily communication is essential for both parties to maintain control of the business.
Focusing on open communication during implementation and launch will lay the groundwork for future interaction. Clients that remain very involved with providers tend to have the best relationships and the fewest problems.
I was once told by one of the old sages of the direct marketing industry that in any business, companies have to “keep the main thing the main thing.” In the 3PF/client relationship, the “main thing” is the success of both companies. Clearly, it is not in the interest of the vendor to provide poor service to the client. And it is certainly not in the client’s best interest to fail to recognize the vendor as being an integral part of the client’s organization.
In too many cases, both the 3PF provider and the client adopt an of “out of sight, out of mind” attitude. The vendor may feel (quite wrongly) that if the client isn’t on-site to oversee operations, it’s okay for some standards to slip a little — receiving can take a day or two longer, returns processing may not be up to par, or mail orders may take two days to enter instead of one.
On the client’s side, the attitude may be, “The creative is great, lists are on target, response rates are up, prices are highly competitive — why shouldn’t we mail an additional 500,000 catalogs?” Nothing is wrong with mailing an additional 500,000 catalogs, it is a win-win situation for vendor and client — they both want more business.
Just don’t forget to tell your 3PF provider about this change. You would be amazed how often important marketing decisions are not communicated to the vendor. By the way, it would be just as bad for the vendor if the client mailed 500,000 fewer catalogs and did not advise the vendor in advance.
The finish line
Vendor and client both go into a business relationship with the highest expectation for success. What happens to derail that success? To paraphrase Pogo, “The enemy is us.” In my experience, the biggest obstacle to a positive partnership is a lack of communication between 3PF provider and client. Communication means more than sending the vendor daily flash reports showing orders entered and orders shipped. Communication means a clear understanding by both parties of each other’s business objectives.
Both partners must assume that they are working for a common goal. If you ask any DTC company utilizing the services of a 3PF provider about its major goals, a likely answer would be that the company does not want its customers to know they are dealing with a third party. The company wants a customer contact experience in which the 3PF/client relationship is transparent to the customer. Only a true partnership can achieve that kind of thoroughly transparent customer experience.
Lew Waddey is a practice specialist with Spaide, Kuipers & Co. The firm provides outsource search services to the direct marketing industry. Waddey can be reached at (423) 886-5255 or (610) 668-8297 and at firstname.lastname@example.org.