Q: What questions should I ask of a fulfillment partner and what should I be looking for in terms of service?
Mark Aselstine, founder Uncorked Ventures
A: When thinking about selecting a fulfillment partner, you should start by setting measurable objectives and standards. You want to ensure that you are holding your partners to specific performance standards as it relates to your fulfillment process. As with any outsourcing project, you should strive to document the improvements due to third-party use.
Here are five questions you should ask a fulfillment partner:
What is the company's business experience?
You will want to consider how long the company has been in the order fulfillment business, the depth of management experience, the strength of the operating management, the quality of the workforce and the state of labor/management relations.
What evidence does the company have of its service quality?
You should look for a formal and documented quality process. In addition, you will want to make sure that the process is actually being implemented.
What is the company's order fulfillment cycle time?
Time is always a critical factor in choosing an outsourcing partner, so look for short cycle times. In terms of service times to expect, Garcia et al. (2012) performed a benchmarking study of the wine industry's supply chain and found that the logistics cycle time, which includes order processing cycle time, purchase order cycle time, bottling cycle time and delivery cycle time is 28 days on average (best in class, 11 days; worst in class 40 days).
What is the company's price? Great service has become a baseline, not a differentiator. The differentiation comes from competitive rates. Make sure the company has streamlined processes so that you do not pay for waste.
What is the company's commitment to developing a long-term relationship?
You will find that most major outsourcing efforts carry the presumption of a relatively long-term relationship. Contracting out a significant logistics function involves a steep learning curve for both parties as well as start-up and transition costs.
Sheneeta White is an associate professor of operations and supply chain management at the University of St. Thomas Opus College of Business.
