Lew Waddey on Outsourcing

Mar 01, 2001 10:30 PM  By

It’s difficult to provide a bidder with too much information

Poor service is the inevitable result if you fail to take the time to manage the third-party fulfillment (3PF) selection process properly

How much time is enough? Most 3PF providers can have full-service operations (contact center, IT systems, and warehouse operations) up and running in approximately 90 days. If the scope of the services you require is more limited, start-up time might be reduced to roughly 60 days.

The first step is to narrow the list of 3PF organizations to a manageable five or six.

Prescreen suppliers. You can find general descriptions of 3PF companies in such resources as trade magazines and directories and on the Web. Client lists are of special interest. Eliminate those providers that do not appear to have expertise in your area of business.

Assembly line

Once you have compiled a short list of potential providers (bidders), assemble a request for proposal (RFP) containing sufficient information about your business for 3PF bidding purposes. It is difficult to provide a bidder with too much information. While RFP formats can vary, you should make sure that at a minimum they include the following elements:

Introduction. This section should describe your business in as much detail as possible. Include a description of your product offerings, history, plans for the future, and the services you require. Include important time lines for vendor selection and starting the program.

Response requirements. You can minimize the time it will take to analyze five or six RFP responses by including a response requirements section. Outline the required response format and due date and describe the selection process.

Processing requirements and program background information. Communicate program information here, including explicit information about services required: order processing, storage requirements, systems and interfaces, reporting, credit card processing, and so on.

If your operation is a start-up, include as much information as possible from your business plan. You should also include percentage of returns, product type, number of SKUs, gift-wrap requirements, and items per order.

Bidder qualifications. Here you ask bidders to respond to questions probing their capabilities in specific areas. You might request vendor history, financial information, and a current client list and references. Ask about each operations area that might affect your program.

Costs. Include a template to facilitate cost comparisons. A note of caution: Some vendors may have pricing categories not listed on the pricing template you provide. Include a statement that, if applicable, bidders are to provide prices for items not shown on the template.

The price comparison will be the most difficult exercise to complete, and it will require perseverance, patience, and a large spreadsheet file.

Site visits. Comparing responses will allow you to narrow the field of bidders to two or three finalists. The next step is a site visit to each. A typical site visit takes about a day and should include a facility tour, talks with operations and client services management, an order processing systems presentation, and final clarification of any processing or pricing questions.

Last word

Once you’ve chosen a vendor, be aware of possible pitfalls — insufficient due diligence, incomplete information in the RFP, and ever-changing client processing requirements may still result in last-minute delays in your “go live” date.

Lew Waddey is a practice specialist with Spaide, Kuipers & Co., which provides outsource search services to the direct marketing industry. Waddey can be reached by phone at (423) 886-5255 and by e-mail at waddey@spaidekuipers.com.