Over the years Argon & 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 posts on these critical “get rights” as you consider your path to outsourcing. We started the dialogue of the transition phase recently on this piece, Successful Outsourcing: Building the transition team. 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 transition team for 3PL selection is in place and the objectives are documented, the project team must plan and execute the transition of the operation from its current location (or provider) to the new location. An effective 3PL implementation project plan will reduce risk and support developing corrective actions when elements are delayed or when problems are encountered while migrating to a new 3PL warehouse. Here is a link to a series I wrote about the 3PL selection process.
- The PM will start the plan by posting the major milestones for the workstreams. He will coordinate with the primary team members to estimate start and completion times as well as critical human and financial capital resource requirements
- The team must plan the inventory transition including dates for first inbounds to the new warehouse, dates for shipping of initial orders, and management of safety stocks across old and new warehouse facilities. Target shipping dates typically provide key anchor points for the plan and determine the timing of key supporting activities
- The team will decide when key customers and channels transition to the new warehouse. Certain customers may require inspections, approvals, or certifications. If so, those lead times need to be expressly highlighted in the plan
- IT testing is a critical activity that must be adequately staffed and managed during the transition period. Testing of all communications protocols, EDI transaction sets, reporting, and other primary IT functionality is critical to successful transition of the operation. Operations management should be involved with approval of test results and verification of system functionality
- The plan should include warehouse facility prep and setup activities depending on the degree of customization required. For contract operations, an empty or unfinished facility may need to be setup from an empty or unfinished condition. Lighting, striping, racking and equipment, docks, electrical, IT and data infrastructure, restroom and break facilities, offices, and other areas may need to be defined and configured
- The 3PL will need a plan for staffing. The plan should include timing for hiring or transferring key management staff, training plans, hourly staff ramp-up, and productivity attainment.
Throughout the transition period, the shipper and 3PL company project managers will coordinate activities, monitor status and highlight any delays. The project managers identify and report conditions that represent risks to meeting schedules and milestone deadlines. Appropriate team members should work together to develop risk mitigation plans to proactively avoid potential problems. They will coordinate communications and status reporting to the organization and the executive teams to keep key constituents informed. A comprehensive implementation planning approach will enable a seamless transition for the shipper and its customer base to their new third-party logistics partner.
To read our first post in this series, visit Successful Outsourcing: Building the transition team.
As of September 8, 2020, Crimson & Co (formerly The Progress Group/TPG) has rebranded as Argon & Co following the successful merger with Argon Consulting in April 2018.
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