10 years in the 3PL world

Hey! This is my first ever newsletter. Thanks for taking a few minutes out of your day to read this. It means a lot.

If you have met me, you know I am full of energy, funny (at times) and enthusiastic about the supply chain space.

If you haven’t, hopefully you can feel the energy come out in the writing.

Like many people in sales, they kind of fall into it.

While I am no different, I’m grateful I fell into the supply chain & logistics space.

It’s a perfect match for me.

I was fortunate to start my career on the brokerage side and then transition to the tech enabled DTC fulfillment operation.

C.H Robinson → ShipBob allowed me to see the best of both worlds.

Public vs. Private

Established Fortune 200 vs. Startup

Gigantic state of the art office vs. teeny tiny office in Chicago with “limited” heat and funky electrical.

What was common in both places was being the voice for the merchants. And boy was I on the receiving end of countless angry/frustrated calls and meetings.

And that is where we will start going deeper.

Why do so many brands view their 3PL as the villain in their supply chain story?

If I had a dollar for every time I heard someone say I HATE MY 3PL, I would be a rich man.

Okay, maybe not rich, but I sure would have several hundred dollars in my pocket.

The 3PL & merchant relationship is the biggest love/hate relationship outside of a spouse and their in-laws.

(I love my mother in law, for the record. Shoutout Deb)

When I worked for C.H Robinson, it was well known within the industry that C & H stood for cheap and heavy freight loads.

It seemed like 50% or more of carriers I tried to procure for FTL would have CH Robinson phone number and freight loads banned from hauling.

Working at ShipBob, for reasons I still don’t fully understand, people thought because they raised significant venture capital that they didn’t care about their merchants.

(I can tell you firsthand that couldn’t be further from the truth. My former colleagues genuinely care about the success of their clients)

Let’s face it, every 3PL messes up. The sooner one comes to that realization, the better off they will be.

In my humble opinion, the overwhelming majority of problems can be traced back to one HUGE area.

Expectation misalignment.

It’s rooted in poor communication.

Brands expect their 3PL to be mind-readers, anticipating their needs and preferences to a tee. On the other hand, 3PL's are not always upfront about their capabilities and limitations. The result? A mismatch of expectations that leads to a bruised reputation for both parties.

It's like a bad first date that somehow turns into a long-term relationship - nobody's happy, but nobody knows how to break it off.

It all starts with a sweet honeymoon phase. The brand, eager to procure a partner that can handle their warehousing and fulfillment needs, swoons over the capabilities and promises of the 3PL. All seems well at first. The 3PL sweeps the brand off its feet with fancy tech and shiny new systems.

But as with any relationship, the cracks soon start to show.

The most common complaint brands have about their 3PL is like a classic sitcom trope: lack of communication.

Suddenly, the 3PL stops calling back. They don’t respond to emails. The SOS slack messages are suddenly ignored.

It's like they've fallen off the face of the earth. The brand starts to panic. Orders are delayed, inventory is mismanaged – it's chaos.

And then there's the issue of transparency or lack thereof. The brand starts to suspect that the 3PL is hiding something.

Which makes for a very important next point.

The onus of expectation alignment is on the 3PL.

(Psssst, 3PL sales reps - stop overpromising stuff you know your company can’t execute. Your commission breath smells like sh*t and it only will hurt the brand in the end. These brands are real people with real bills and real families, just like you)

During our sales process at ShipBob, we would have multiple needs assessment and value discovery calls before presenting pricing to ensure we could, quite literally, do what the merchants need.

If we couldn’t meet their operational and technical needs, we would be upfront with the merchant and cut them loose.

We learned the hard way at the beginning. But over time, our process was refined and would ruthlessly disqualify potential merchants.

Now, should brands be off the hook for all the problems with the 3PL?

Hell no!

Brands often get so caught up in the thrill of the chase (read: cutting costs) that they forget about the essential stuff like whether the 3PL can actually handle their specific warehousing and shipping needs.

And when things go wrong (surprise, surprise), they glare at their 3PL partners as though they've just committed a crime.

If you have not gone through the 3PL procurement process before, it can be a tedious and time consuming one.

Yet, it’s probably the most important part to ensure that none of the above nightmare scenarios happen.

(We will go through 3PL procurement in detail in a future newsletter)

I will give two big pieces of advice to brands who are considering a 3PL switch.

1. Try making it work out with your current one.

2. Focus more on what you are gaining than what you are spending.

The 3PL relationship should be a long-term marriage.

Don’t get a divorce at the first few signs of strife.

Well, that’s it for this week!

Any topics you lovely people would like to see me discuss in the future?

Feel free to email me or DM on good ole LinkedIn.

Until next time.

Cheers,

Hodes