Evaluating Same-Day Shipping SLA
When choosing a 3PL (third-party logistics) provider, it is essential to consider their Same-Day Shipping Service Level Agreement (SLA). This article explores how to effectively compare different 3PL providers based on their ability to meet same day shipping commitments.
Understanding the 3PL SLA
The primary focus of this evaluation is the Same Day Shipping SLA. For instance, if a 3PL commits to shipping 98% of orders received by 10am on the same day, what does this mean for your business?
Assessing Order Volume and Impact on Customer Experience
To begin, it is crucial to determine the percentage of orders you typically receive by the specified cutoff time. Additionally, understanding the performance expectations and evaluating the resulting impact on your customers' experience is equally important.
Comparison of 3PL "A" and 3PL "B":
Let's compare two hypothetical 3PL providers to illustrate the significance of seemingly small differences in performance.
- 3PL A: Commits to shipping 99.8% of orders received by 2pm on the same day, with a 98% same day shipping rate for orders received before the end of the day.
- 3PL B: Commits to shipping 98% of orders received by 10am on the same day, without any commitment for orders received after the cutoff time.
Case Study Scenario:
Consider a mid-sized eCommerce retailer processing 1000 orders daily. Out of these, 40% are overnight orders arriving by 10am, while the remaining 60% arrives after 10am. Among the latter, 80% arrives by 2pm, and 50% of the remaining volume is in the system before the 3PL's 4pm cutoff time.
Based on the provided data, let's assess the impact of the different 3PLs on the order processing:
- 3PL A: Processes 400 overnight orders and an additional 529 orders received between 10am and 3pm, totaling 929 orders processed on the same day out of the total 1000.
- 3PL B: Processes 392 overnight orders on the same day, with no commitment for orders received after 10am. Hence, only 392 orders are processed on the same day.
Over the course of a month and a year, the "small" difference in Same-Day SLA become glaringly impactful.
Significance of Performance Differences in SLA:
As observed, even seemingly marginal variations in performance can have substantial implications for customer experience.
When evaluating 3PL providers, it is crucial to carefully assess their Same Day Shipping SLA and understand its impact on your specific order volume and customer expectations. By considering these factors, you can make an informed decision that aligns with your business requirements and ensures a positive customer experience.