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November 8, 2021
Choosing a 3PL for your CPG? Look beyond trucks and warehouses – EDI capabilities are critical to ensure smooth operations and happy retail partners.
The 3PL industry has come a long way in the digital age. Providers now use advanced robotics and driverless vehicles. They train warehouse teams using augmented reality. And they leverage AI for forecasting and planning. So for a CPG supplier looking for a 3PL partner, there’s a lot to consider on top of the usual things like geographic coverage and a reputation for reliability. There’s also EDI to consider. And while it may not have the wow factor of a delivery drone, it can have a much bigger impact on your CPG business.
There are lots of reasons CPG suppliers choose to outsource to 3PL providers. Maybe you want to streamline your supply chain operations, reduce costs, expand your distribution network, or simply focus your resources on your core business activities. But you need more from a partner than simply fulfilling orders on time.
How well your 3PL provider manages data, documentation, and EDI compliance can make or break your experience, your compliance standing with retailers, and your customer relationships. That means any assessment of a potential partner must include a look under the hood at EDI.
For a CPG supplier looking for a 3PL partner, there’s a lot to consider on top of the usual things like geographic coverage and a reputation for reliability. There’s also EDI to consider. And while it may not have the wow factor of a delivery drone, it can have a much bigger impact on your CPG business.
How your 3PL handles EDI says a lot
EDI compliance is an IT-intensive function that requires specific expertise and continual management. Retailer requirements are continually changing, and staying up to date requires continual integration work, mapping updates, and troubleshooting. If your 3PL company relies on home-grown systems or legacy partners for EDI, they will likely be devoting considerable time and resources to EDI maintenance, possibly at the expense of their logistics services. Internally-managed EDI systems tend to be more manual and require more human intervention, which can create bottlenecks, scalability issues, customer support limitations, and other headaches for your CPG business, particularly during peak periods.
Some 3PL providers, on the other hand, don’t want to be in the EDI business at all and will require that you work with an outside provider to stay compliant with your order sources. If you aren’t already working with a partner, you’ll need to consider the costs and effort involved in establishing that relationship as well.
What will it cost, and who pays?
In addition to examining the resources your 3PL devotes to EDI, you need to understand the costs involved. Do they bury the cost in your fees? Do they pass costs through to you and if so, how transparently? To assess the true cost of a given 3PL provider, you need to know what you’ll pay to ensure EDI-compliant practices and what you’ll get for your money.
Other factors to consider:
Integration and compatibility. Your 3PL’s EDI systems will need to be compatible with your own systems to facilitate seamless data exchange and communication. Their technology platforms should integrate with your systems for the most efficient data sharing and visibility. But who will do the integration? Can they connect with your back-office systems in the way you want, whether it’s via API, Excel, or a custom integration? What if you decide to adopt a new ERP? These connectivity issues need to be addressed and clarified before you sign on the dotted line.
Scalability and agility. Can the 3PL provider’s EDI infrastructure scale to accommodate your business growth and evolving supply chain needs? What if your integration needs go beyond conventional EDI and incorporate shopping carts, marketplaces, or sales to Amazon? When you add new retailers or order sources, will your 3PL be able to map and set up EDI quickly and seamlessly without months of integration work? Bottom line: will they help or hinder your growth as a CPG?
Consider your seasonal sales patterns, too, both in terms of outbound shipments and inbound receipts of stock. A 3PL may have the warehouse capacity to accommodate surges, but can their EDI processes keep pace? The fewer manual workflows they rely upon, the more elastic they can be during peak periods.
Can the 3PL provider’s EDI infrastructure scale to accommodate your business growth and evolving supply chain needs? What if your integration needs go beyond conventional EDI and incorporate shopping carts, marketplaces, or sales to Amazon? When you add new retailers or order sources, will your 3PL be able to map and set up EDI quickly and seamlessly without months of integration work?
Timing and precision. Look for 3PL providers that offer real-time tracking and visibility tools to monitor inventory levels, shipments, and logistics operations for better decision-making. You need them not only to ship on time, but also to transmit shipping confirmations and other documents on time to meet your customer requirements. And you’ll need to look at the details. Do their inventory reports account for damaged goods so you can avoid short shipments? Can they print compliant labels that meet each retail customer’s exact specifications?
And if you’re thinking about switching from one 3PL to another, timing will be critical. How will your new partner handle open orders during the transition to ensure nothing gets left behind, either in terms of physical goods or data?
Head spinning? Crisp’s EDI experts can help
We get it. You’re in the CPG business, so evaluating the nitty-gritty EDI capabilities of a potential 3PL partner may not be your comfort zone, which is why Crisp is here to help.
Our technical team is available any time to help you look objectively at the EDI capabilities of a 3PL partner to assess and resolve potential EDI pitfalls. That way you can focus on evaluating the other logistics-related factors that matter to your business.
Whether you’re dissatisfied with your current 3PL and looking for better support, expanding to a new geo, or have simply outgrown running your own warehousing and logistical resources, ensuring that you can stay fully compliant with your customers’ EDI needs is an essential part of choosing a 3PL partner.
