Even if you’re happy with your third party logistics providers, a responsible business entertains 
proposals from their competitors from time to time, just to make sure they aren’t leaving money on the table. Unfortunately, this means that someone has to read and analyse the proposals.
Some of these proposals can be as impenetrable as the tax code and as thick as a phone book. Though they are eminently tempting to skim, pricing proposals from fulfilment or warehousing providers should be read carefully.
We’ve made a short list of tips to understanding, and getting the best deal from, warehousing and fulfilment pricing options.
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Assure yourself that the provider is listing all of their costs. Hidden fees can make or break a good deal. This is an unethical process. Do not accept the excuse that it is ‘standard procedure’.
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Keep a sharp eye out for periodical minimum charges. Especially for those businesses which predict slow periods or seasonality, these can turn slow months into losing months. Unless you are certain it is a good deal for you, avoid monthly minimums.
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If you will be doing a lot of volume with this 3PL, ask for a volume discount, especially if it is not listed on the pricing sheet. Sometimes you already got their best offer, but they won’t resent you asking, so long as you take ‘no’ well.
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Make sure you understand which costs recur monthly, which are one-off, and which are activity dependant. Do not make assumptions here. Again, it is unethical to try and disguise this kind of thing, but some companies do it.
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Try and get their handling charges rolled into your existing product costs. Recalculate your profits this way and compare. You might be surprised.
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Find out whether the vendor gets any margin on the freight. Every once in a great while, there is a lot of many involved. Always ask.
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See if you can get referrals from a few of the 3PL’s current customers. Ask them whether the costs seemed to change shortly after they signed on, and whether they thought any of the pricing was misleading.
- If you are considering going with the new provider, make sure that all the terms that attract you to the deal are included in a valid contract.
Being a bit over-careful can save you time, trouble, and embarrassment later. If you need any advice on warehousing costs and availability, please contact Whichwarehouse today on 0800 1707 555 for further assistance.