You’ve decided to outsource the warehousing and shipping of your products to a 3PL (third party logistics) provider. You know that focusing on your core competencies – sales, marketing, product development - is where you are going to experience the most return on your investment. Before you take the next step, educate yourself on some of the changes you'll need to make to your business practices to get the most out of your new business model. The three steps below will help you shorten the implementation period, provide a more transparent business change to your customers, and possibly save you money in the process.

1. Trust Your 3PL
Your 3PL partner may set up its warehouse differently and pick, pack, and ship your products differently than you are used to. As long as the end result doesn't look any different to your customers, let them operate in the way that’s most efficient for them. The 3PL may know, for instance, that it is more efficient to put away products as received and not to wait until the next morning to begin shipping products. Rather than spending energy looking over your 3PL's shoulder and concerning yourself with how things used to be done, you're better off focusing on your customers' experience with the 3PL.

2. Don't Underestimate Data Complexity
Next, it's time to get into the process of aligning your enterprise systems. This step, known as mapping, entails matching the data fields in your system with the data fields in your 3PL's system. It's important to thoroughly map out all data fields that will be shared with your 3PL and verify that all business objectives have been met.

Companies often underestimate the complexity of their data, and they don't build in enough time to properly map out the data flow.  This oversight can negatively affect the 3PL's ability to map out the most efficient process flow and can compromise its ability to ship on time.  Proper mapping could take months to complete if the client isn't fully ready to support the effort.  After the data fields are transformed, clients should do a mock startup to ensure that everything goes smoothly.  By doing this, there is a better chance that any exceptions that hadn't been previously discussed may be caught and built into the system. Not all of the client's business rules may have been captured in a database. The client’s warehouse employees may have been trained on some unique handling on shipments, but that information may not appear in the system. It's this kind of knowledge that gets overlooked when the mapping step is compromised.

3. Use EDI/XML To Push And Pull Data
There are two basic ways to send B2B data. The first way is to use EDI (electronic data interchange), an established protocol that has been around since the 1970s. The second method of sending data is via XML (extensible markup language), a flexible descriptive code often used for sending data over the Internet. Both protocols have their upside and downside.

Oftentimes the 3PL you choose will dictate which method you use for sending data. Like many large companies, many large, well-established 3PLs use EDI as the primary means of transmitting data. The strength of EDI is that it is a very secure way to send and receive data. The downside is that even after purchasing special servers and software that translate your data into an EDI format, there may be monthly service fees associated with the VAN (value added network) contract. Because some EDI is probably inevitable, it's important to minimize your EDI transactions by determining how much supply chain visibility you need. In reality there may be just a few data sets you need to get from your 3PL, such as ASNs (advanced shipping notifications) and order fulfillment confirmations. If you find yourself becoming too much of a watchdog over your 3PL, you have to think about why you chose them in the first place. The benefit of being able to use XML is that you can make use of the Internet, which will save you the monthly service fees of leasing a VAN. XML enables the client's customers to more easily interface with the 3PL over the Web. 

Some of the upfront investments for sending data in an XML format are similar to EDI, however. You will need a dedicated server which is able to translate your data into an XML format and to provide trading partner integration. Also, you will need to configure your server to communicate securely by setting up certificates issued through a trusted certificate authority, such as VeriSign  The increased bandwidth that is needed to send XML transactions may require the user to purchase additional servers and use higher speed connections such as T1 or T3 lines, which increases the investment. Ultimately, this investment should be weighed against the monthly service fees of using a VAN.

Following the three steps outlined above will help reduce some of the obstacles you may encounter as you outsource your warehousing to a 3PL. It will also enable you to capitalize on your core competencies and allow your 3PL partner to capitalize on its core competencies as well.