A reliable logistics provider is crucial for a successful eCommerce venture. Companies that focus on supply chain optimization can expect a 10%–15% reduction in total logistics costs, and these services bring such impactful efficiencies. The right logistics provider partner can dramatically improve a business’s bottom line by optimizing processes, slashing costs, and elevating customer satisfaction.

This article offers practical guidance on forging strong relations with logistics providers. We’ll also share insights from our recent interviews with Kathleen Sullivan Garman, founder and CEO of SullyGarman & Associates, and Steven J. Edelstein, vice president of strategy and partnerships at Fulfillment IQ.

The role of logistics providers

Logistics providers are integral to the supply chain, as they manage the flow of goods from the point of origin to the end consumer. They handle transportation, warehousing, inventory management, and order fulfillment, ensuring products arrive on time and in good condition. That efficiency directly affects customer satisfaction and brand reputation.

As Kathleen Sullivan Garman aptly puts it, “[Logistics providers] are the last people to touch your product before your customer opens it up. They are the first people to open up your returns and decide if they’re worthy of being reshelved or not. They are seeing your stuff go in and out all day, every day.”

Smart fulfillment operations are essential for maintaining profitability and competitiveness, so choosing a provider to handle them deserves close scrutiny.

An expert’s approach to operations

Kathleen is a seasoned expert in eCommerce operations. She has a rich background working with various brands in multiple industries, from consumer packaged goods to commoditized products and software companies.

Her focus on operational efficiency and proactive planning has helped many businesses optimize their supply chains and improve their bottom line. Kathleen has a keen eye for identifying areas where brands can streamline processes and reduce costs. Her experience spans start-ups and established businesses, giving her a comprehensive understanding of the challenges and opportunities at different growth stages.

Kathleen advocates for a proactive approach to business operations. She believes being proactive, rather than reactive can save brands significant money and prevent operational headaches. “Operations people, you know, we clean up messes all day long,” she explains. “It can be a very reactive job rather than proactive, and I really like to shift brands and clients over to being proactive.”

Align with logistics providers

Meanwhile, Steven Edelstein emphasizes the importance of cultural assimilation and communication between brands and 3PLs: “You need to understand their internal workings, both from a marketing and operations perspective.” That alignment helps avoid obstacles and enhances cooperation.

Reciprocally, he also highlights the need for logistics providers to invest time in learning their clients’ industries and challenges. Steven notes, “The biggest problem I’ve seen with most 3PLs is that they don’t make an effort to understand the client’s industry. This lack of effort can create significant barriers to a successful partnership.”

Elements of successful eCommerce operations

By focusing on automation along with inventory and order management, businesses can enhance both their operational efficiency and customer satisfaction. That checklist should include:

• Robust inventory management: Effective inventory management involves maintaining the right balance of stock to meet customer demand without overstocking, which can tie up capital and increase storage costs. Properly managed inventory ensures products are available when customers need them, leading to higher satisfaction and repeat business.
• Automation and integration of sales channels: Sales channel automation and integration are essential for scalability. As businesses grow, manual processes become inefficient and prone to errors. Integrating sales channels ensures inventory levels, order processing, and customer data are synchronized across all platforms.

Tools like Shopify, Orderhive, and TradeGecko can facilitate this incorporation to reduce the risk of overselling and stockouts and improve operational efficiency.

• Efficient order management: Order management systems (OMS) are crucial for handling orders from multiple sales channels and directing them to the appropriate fulfillment centers. An efficient OMS can automate routing so orders are processed and shipped quickly and accurately. This improves delivery times and minimizes the likelihood of errors, which, in turn, enhances customer satisfaction.
• Hitting inflection points: Recognizing and preparing for inflection points in your business growth is vital. Kathleen stresses the importance of having a plan in place before reaching critical milestones. For example, transitioning from managing stock in spreadsheets to using a dedicated inventory management system as your business scales can prevent operational bottlenecks.

Proactive planning and automation

Proactive planning allows businesses to anticipate and address potential issues before they become major problems. It involves forecasting demand, preparing for seasonal spikes, and verifying that all aspects of the supply chain are ready to handle increased volumes. This approach minimizes disruptions and ensures smooth operations.

Automation offers significant benefits at various stages of business growth. For small companies, automating repetitive tasks can save time and reduce errors. As brands scale, more advanced solutions, such as integrated OMS and warehouse management systems, become essential to handle larger volumes efficiently.

Kathleen advises businesses to start by automating the transmission of orders from sales channels to warehouses. “Make sure that you are automated from whatever sales channel you’re using to whatever warehouse, and you’re not doing manual transmission of orders,” she suggests. This eliminates manual errors and speeds up order processing.

Throughout expansion, further automation in order management can include advanced routing and inventory allocation based on real-time data.

Overcoming challenges at different growth stages

Businesses face different challenges as they grow: At the $100K stage, managing inventory and fulfilling orders manually can become overwhelming; once a company hits $1M in revenue, it’s critical to integrate sales channels and automate key processes; when they reach $20M, brands must focus on optimizing their supply chain, managing multiple warehouses, and ensuring seamless order fulfillment.

However, businesses can address these challenges through strategic planning and automation. Kathleen recommends evaluating profitability and monitoring operational costs at every stage. Implementing the right technology solutions, such as OMS and inventory management software, can streamline operations and support scalability.

She highlights the importance of continuous evaluation of profitability. “Revenue and profitability don’t often correlate at all. You could have a hundred-million-dollar company that has $98 million in expenses,” she notes.

By tracking expenses closely and identifying areas of inefficiency, businesses can ensure they remain profitable as they grow.

The influence of returns on profit margins

Reverse logistics can significantly impact profit margins, so managing returns efficiently is crucial to minimize that financial impact. Kathleen points out that returns can “not only suck out your revenue — it could suck out more than your revenue and push you into losses.” Effective return management can mitigate these risks.

To slash your return rate, provide accurate product descriptions, detailed sizing information, and high-quality images. Offering excellent customer service and an easy return process can also enhance customer satisfaction. Efficient return management involves quickly processing returns, inspecting items, and deciding whether they can be reshelved or need to be liquidated.

Additionally, innovative solutions, such as connecting customers who want to send back items with those looking to buy them, can lower returns-related costs. Some companies facilitate direct exchanges between buyers, which both prevents products from returning to the warehouse and reduces shipping and processing expenses.

Develop a partnership mindset with logistics providers

Viewing logistics providers as partners rather than faceless vendors can lead to more collaborative and effective relationships. An open, collaborative mindset encourages open communication, mutual support, and shared goals. In turn, that encourages your logistics provider to become invested in your success, leading to better service and operational efficiency.

Steven also emphasizes the importance of “[h]aving an understanding of the client business, their brand, their intention, their go-to-market strategy, all the things that are critical to their lifeline.” That knowledge helps a logistics provider tailor their services to meet specific needs.

Further, a strong partnership with your logistics provider can enhance customer satisfaction by ensuring timely and accurate deliveries. It also improves operational efficiency by allowing for better coordination, problem-solving, and strategic planning.

For instance, they can proactively monitor your inventory levels and sales trends to help you avoid stockouts and optimize order fulfillment. That, in turn, enables you to respond quickly to changes in demand and maintain high levels of customer satisfaction.

Utilizing technology and insights for better logistics management

Technology plays a crucial role in enhancing logistical procedures. Advanced software solutions can provide real-time visibility into inventory levels, order status, and shipment tracking. That detailed view then enables better decision-making and more efficient operations.

Several tools can help logistics providers and brands gain valuable insights: Warehouse management systems (WMS), transportation management systems (TMS), and enterprise resource planning (ERP) systems offer comprehensive features for managing logistical operations. Additionally, analytics solutions can uncover actionable insights on sales trends, inventory turnover, and demand forecasting.

Technology-driven partnerships can yield significant advantages. For example, integrating your eCommerce platform into your fulfillment provider’s system can automate order processing and improve accuracy. Meanwhile, adopting analytics tools to monitor and optimize delivery routes can reduce shipping costs and improve delivery times.

Best practices for choosing and working with logistics providers

To select the right logistics provider, you need to evaluate several factors: Consider their experience, reputation, and range of services; assess their technological capabilities and whether they can scale with your business as it grows; and request references and reviews from other businesses they’ve worked with.

Keep in mind that, although pricing is important, it shouldn’t be the sole factor in choosing a logistics provider. Prioritize reliability, service quality, and the provider’s ability to meet your specific needs.

Key evaluation criteria for a logistics provider

• Expertise and experience: Seek logistics providers with a proven track record in your industry and a deep understanding of your specific needs.
• Service offerings: Ensure the company offers a comprehensive suite of services that align with your business model, from warehousing and transportation to fulfillment and returns.
• Technology and scalability: A robust technological infrastructure is essential for efficient operations, so choose a provider that can adapt to your business growth.
• Reliability and performance: Evaluate the service’s on-time delivery rates, damage claims, and overall performance metrics.
• Customer service: Strong communication and responsiveness are crucial for a successful partnership.
• References and reviews: Seek feedback from previous clients to gauge the logistics provider’s reputation and performance.

Wrapping up — Build solid partnerships with logistics providers for the future

It’s imperative to develop strong relationships with logistics providers to optimize eCommerce operations and ensure customer satisfaction. They allow businesses to unlock significant advantages in efficiency, cost, and customer satisfaction. Through proactive planning, technological innovations, and reliable cooperation with your chosen partner, you can build a resilient supply chain that drives growth and outpaces the competition.