by Nish George, CEO
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The most fundamental obligation of a 3PL warehouse is to NOT LOSE YOUR STUFF. Many brand owners assume this is so basic and obvious that they don’t even have to bring it up during their 3PL interviews. Nothing could be further from the truth! The #1 reason I hear from brand owners wanting to switch 3PLs is that they can’t trust the 3PL’s inventory counts. (I hear this 10x more than wanting a lower price.)
The #1 reason I hear from brand owners wanting to switch 3PLs is that they can’t trust the 3PL’s inventory counts.
And for good reason: not having reliable inventory numbers can be just as ruinous for your brand as not knowing how much cash you have. Remember, if you’re like most DTC brands, you have way more cash sitting in inventory than in your bank account!
If you’re like most DTC brands, you have way more cash sitting in inventory than in your bank account!
But how can you tell ahead of time whether a 3PL will lose your stuff? It turns out there’s one single metric that captures this perfectly: order fill-rate. This is the % of order-lines that a 3PL actually ships from stock, out of all the order-lines it claims to have in-stock and in sellable condition. The warehousing industry’s goal is 99.5%, meaning inventory should be wrong less than 1 out of 200 times. At Fetch Fulfillment, our fill-rate is 99.95%, which means our inventory count is wrong 1 out of 2,000 times (10 times better than the industry benchmark!)
At Fetch Fulfillment, our fill-rate is 99.95%, which means our inventory count is wrong 1 out of 2,000 times (10 times better than the industry benchmark!)
Of course, you should ask to see daily values of this KPI over the last 3-6 months, so you can test whether someone’s claim of “100%” is accurate.
What if a 3PL can’t tell you their fill-rate, but they still insist their inventory counts are dead-on? Or maybe you want another point of validation? There are 2 more tests you can do: evaluating inventory controls while visiting the 3PL in-person, and talking to the 3PL’s other customers.
During your in-person visit, ask the 3PL inbound manager how they know what SKUs and quantities came in. (Red flags: if they aren’t receiving against your purchase orders, or POs; if they’re blindly trusting what’s on the PO rather than opening at least 1 case on every inbound to check count & condition; if they’re not communicating discrepancies / damages back to the brands; if there’s no video recordings of the entire process; if there’s no timestamped system log of every inventory movement inside the 3PL along with from-location, to-location, SKU, and quantity moved).
As for interviewing the 3PL’s other customers, just ask how often they need to cancel and refund customer orders because of wrong inventory counts (which is the same thing as order fill-rate). If it’s a regular occurrence, thank them for helping you dodge a bullet – and go find a better 3PL.
Keep reading for Part 3: the "Trust With Your Money" Test
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Fetch Fulfillment is a New Jersey-based 3PL for brand owners who want direct-to-consumer fulfillment to be the least stressful part of their business. Most 3PLs are good at one thing, like shipping on-time, or having modern tech, or picking up the phone. What makes Fetch unique is that it's stellar at all 3: it provides high-end boutique-grade customer service -- as seen in its glowing reviews and +92 net promoter score -- combined with its real-time cutting-edge tech and well-managed operation, with 99.2% same-day shipping and 99.95% order fill-rate. The Fetch team lives by its motto: they are Your Brand's Best Friend.
