Over the years Crimson & Co has assisted many clients in various stages of logistics outsourcing. Recently we completed the 3PL selection and transition phases for a large scale, multi-site eCommerce fulfillment operation. Important elements of this very successful transition were putting together a strong team and executing to a detailed plan. Check out our latest blog post on these critical “get rights” as you consider your path to outsourcing. To revisit a previous series on the 3PL selection process, see Logistics Outsourcing, Is it right for your business?
The Path to Outsourcing Warehouse Operations
Once the 3PL selection is complete (read about Successful 3PL selection here) and the contract is finalized, a cross functional project team must prepare and execute the transition of the operation from its current location (or provider) to the new location. Successful 3PL transition, implementation planning and execution require focused attention from the transition teams for both the shipper and the third-party logistics companies.
The transition team should keep the objectives of the transition in mind throughout the planning and execution of the changes.
- The change must be seamless and “invisible” to the end customers
- The operation can be transferred in manageable “chunks” but each must get quickly up to speed once shipments begin
- The operation should be launched in a manner to attain planned benefits of the outsourcing contract as quickly as possible
- The teams should strive to build mutually beneficial relationships in order to meet both planned and unforeseen challenges
The transition teams should establish and focus on the common objectives, “we’re on the same team to satisfy customers.”
Transition team members and their roles/responsibilities should cover the key aspects of the operation and supporting infrastructure.
- The project manager (PM) maintains, reports and coordinates the project schedule, milestones, resource allocations, budget, etc. and escalates issues as they arise
- Operations management members execute the key operational transition activities such as staff planning, hiring, SOP development, and “boots on the ground” monitoring of facility preparation status
- Inventory management representatives ensure that inventory loading into the new facility occurs in a controlled manner that enables timely “cutover” of customer orders. They will coordinate movement of excess inventory items, receipts of new product into the new facility and transfers of existing inventory just prior to “cutover”
- Information technology team members will coordinate systems setup, data loading, IT infrastructure, and integration testing. Both the shipper and 3PL must allocate sufficient resources to complete IT testing prior to startup of shipping activities
- Depending on the complexity of the operation, engineering may have representation on the transition team for layout and design, equipment specifications, and facility preparation and setup activities
- Depending on the scope of the services to be provided by the 3PL, procurement may need to be involved to insure supplies and an ongoing supply replenishment process are in place for things such as packaging, corrugate, labels, etc
- Transportation team members will need to coordinate the transition of any functions being outsourced to the 3PL, or if kept in-house, update carrier agreements to reflect the new location for inbound and/or outbound shipments
- The team and various sub-teams should meet at least weekly and sometimes more often as necessary. The workstreams should report progress, delays, and risks. The team should also update key executive management on a regular cadence agreed by management
Once the team(s) has been formed and is aligned with goals, members will develop a 3PL implementation plan with key milestones and deadlines. They should establish a communication cadence for regular full team meetings as well as for each associated workstream. A successful and smooth supply chain solution transition to a 3PL provider is possible, and the transition team makes the difference.
Published in August 2018