The relationship you have with your third party (3PL) warehouse is one of the most important relationships you will build in the supply chain. When you think about it, your warehouse is handling your two biggest assets: 1) your inventory, and 2) your customer experience. They hold your ability to be successful in their hands.
Taking the time to build a strong warehouse relationship from the beginning will be well worth your time in the long-run.
A healthy warehouse relationship means more collaborative and efficient communication, which ultimately saves you money and time, and enables a better experience for your end-user.
Whether you are a shipper or a warehouse operator, these 20 tips will help you optimize your warehouse relationships and create a win-win environment for long-term success.
1. Make the goal win-win relationships
Your warehouse partner needs to make money and so do you! If you are too fierce of a negotiator and your partner can’t make money with the deal, they are not going to be motivated to give your projects the attention they deserve. Relationships where only one-side is profitable often lead to poor results and relationships that don’t last.
2. Set realistic expectations
Go into the process setting realistic expectations of what your needs are. Don’t hold back information on the complexity of your needs to save money. For example, if every container that arrives is floor loaded and needs to have special labeling added that’s more work than just palletized containers and your warehouse partner needs to know that upfront.
It’s true that more simple business needs usually means cheaper warehouse costs, but a lack of transparency when setting price will come back to haunt you in the end. Primarily, your warehouse partner will not be sufficiently prepared to meet your needs, which can cause a variety of delays and errors.
3. Don’t be the Guinea pig
If the warehouse has never done pick and pack, you don’t want to be its first pick and pack customer. People learn by making mistakes and it’s probably best if they don’t learn with your business.
To safeguard from this, you want to get a good list of services from them before signing on. Once you find out the value-added services (VAS) they offer, you can assess whether your needs are a good fit with their service offerings.
4. Don’t be the highest maintenance customer
In addition to making sure service offerings match your needs, you also want to make sure you fit within their portfolio of existing customers. If you are more work than anyone else, the warehouse team may find it difficult to successfully deliver your day-to-day needs.
For example, even if they offer pick and pack as a service and they have been doing it for a while, you still don’t want to be the only customer they are doing it for at that time. If all their customers are pallet in and pallet out and you require high volume pick and pack with special overbox and packing list requirements, that’s a drastic departure from everyone else. This makes you a “high maintenance” customer because you are so much more work than other customers. Ideally, you want your needs to fall somewhere in the middle of their portfolio.
5. Listen for clues into their culture
Finding a warehouse who shares a similar culture with your company is a good indicator of how successful your relationship will be. To this end, you want to listen for clues into the warehouse’s culture to make sure you are a good match.
It’s easy to claim to have a good culture, but it’s the day-to-day behaviors and actions that will be your best determinate. Be observant of things like who answers the phone when you call, is it easy to get through and do people return your calls and answer questions eagerly.
6. Schedule regular meetings for each side to provide feedback
Have scheduled, standard communications with your warehouse where both of you get the chance to provide feedback on what’s working and what’s not. This is a great time to share insights into each other’s businesses and an opportunity for growth on both sides. Not to mention it will help improve efficiencies and accuracy rates over time.
If you are a high touch business, you might consider scheduling these meetings monthly. For more simple businesses, a quarterly meeting should be sufficient.
7. Treat your warehouse partners like an extension of your company
This is a one of the most important things you can do to ensure a successful relationship with your warehouse partner. You want to treat your partners as if they were your co-workers. Think of them as an extension of your company and treat them with similar respect. As I mentioned earlier, they are handling your two biggest assets: your inventory and your customer experience. It’s critical you keep them engaged and happy.
8. Be clear and specific in your contract
Your contract is what is referred back to whenever there is an issue or you need resolution on a problem. The more specific and clear you can be in the beginning, the easier it will be to clear up problems in the future. Make sure to ask questions like “what is your hourly rate for labor?” and “what is your cancelation charge and return order fee?” And then make sure those things are outlined clearly in the contract. If you think it might be a problem in the future, make sure it’s covered upfront!
9. Know when to ask for favors
A time will come when you need to ask a favor of your warehouse. Be conscious of how much you ask for favors and when and what you choose to ask for. Helping with a last-minute emergency once every couple of months is very different than being called to do it every couple of days.
10. Don’t treat everything like the sky is falling
Make sure urgent problems are actually urgent. If everything is urgent, eventually nothing will be urgent to your warehouse partner. Prioritize emergencies and trust them to handle the day-to-day order management.
11. Don’t forget to say “please” and “thank you”
This seems almost too obvious, but it’s amazing how far respect and kindness will get us. A simple “please” and “thank you” every once in a while is a great rule of thumb for anyone looking to build strong relationships with their warehouse partners.
12. Stay up-to-date on your invoices
If your company is not paying your warehouse on time it will affect the service you are receiving. The last thing you want to hear is that orders cannot be shipped because a payment is past due. A simple solution for this is to prioritize your warehouse invoices with your accounting team.
13. Define your service level agreement up front
If you expect all orders received by 10 a.m. to be shipped by 4 p.m. the same day, make sure that is outlined in a service agreement prior to starting work together. A clear and detailed service level agreement will alleviate day-to-day confusion and the need for time-consuming clarification calls.
14. Have an agreed upon standard operating agreement (SOP)
If you have a list of specific shipping needs that have to be met for each individual retailer you ship to, make sure all those requirements are outlined and written down in a SOP. For example, if Target has a different set of retailer compliance guidelines than Amazon, your warehouse partner needs to know this. And, it’s up to you to make sure they do! Having a SOP written for both you and your warehouse partner to reference will greatly improve day-to-day management and efficiencies.
15. Identify a shared folder system at the beginning
Work with your warehouse partner to identify how you will share and store documents throughout your relationship. Use a shared folder system like Google docs or Dropbox to collect important documents. This is far easier than searching through months and sometimes years of emails every time one of you needs to find something. It’s a simple step that will save you time and headaches over the course of your relationship.
16. Visit your warehouse and get to know the team personally
Take the time to get to know the people who are running your account at the warehouse. Everyone from the account manager to the pickers. It’s helpful to have an actual relationship with the people you work with. Even if the warehouse isn’t in your backyard, try to visit at least every six months, if not more. Without visiting the warehouse and making a point to personally get to know the team, you really can’t know the state of your inventory and how things are being managed.
17. Appoint a main point of contact for daily communication
This is another simple action that can make a big difference. Without a single, clear point of contact, you and your warehouse partner can get overwhelmed with multiple and duplicate requests and phone calls. To avoid this, identify a single, main point of contact for both sides and make them the main communicators between entities.
18. Identify how you want to be communicated with
In addition to who you will be communicating with, it’s important to also have a conversation about how each one of you wants to communicate. Emails, phone calls, texting, etc. What is the preferred method and how can you both accommodate each other’s preferences without jeopardizing performance?
19. Have a conversation around charge-backs
Charge-backs are a notoriously challenging part of any warehouse relationship. Animosity can grow between you and your warehouse partner if decisions are not made early-on about who will take responsibilities for charge-backs. No matter what decision is made, it will be beneficial for both parties to have this conversation prior to the first charge-back.
20. Start the renegotiation process earlier than later
Know when your contract term is up and be proactive in determining the renegotiation process. Depending on how your relationship has been unfolding, your warehouse might be considering raising rates or making changes to your agreement. Taking a proactive approach can give you the time you may need to mend broken relationships or address concerns that could improve your renegotiations once the time comes.
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In the end, they key to successful warehouse relationships is really the key to any healthy relationship: good communication and mutual respect. Keep each other in the loop, be upfront, treat each other like co-workers and remember to say “please” and “thank you.”
Maintain these simple actions, along with some of the other suggestions, and you are well on your way to a better warehouse experience, and hopefully a new long-term partner!