The Power of Explicit Knowledge: Why Understanding 3PL Concepts is Essential for E-commerce Success

As e-commerce continues to grow exponentially, businesses are increasingly turning to third-party logistics (3PL) providers to handle their order fulfillment needs. While outsourcing fulfillment offers numerous benefits, it also requires a shift in mindset for e-commerce sellers. In this introductory blog post, we'll consider the distinction between the "implicit" and the "explicit.” Unless you appreciate this crucial difference, e-commerce sellers cannot choose between 3PLs or hope to maximize the benefits of outsourcing their fulfillment operations.

The Shift from Implicit to Explicit Actions

When e-commerce sellers choose to self-fulfill their orders, many of the decisions involved in the fulfillment process are made implicitly. This means the seller relies on their intuition, experience, and understanding of their business to make decisions that may not be formally documented or explicitly defined. This approach can work well for small-scale operations where the seller has a deep understanding of their products, customers, and processes. Individuals must be taught “the way” we do things. Often this process is one of continuous trial and error. It also routinely sees “old mistakes” get made anew by new hires who haven’t yet learned “how we do things around here.”

However, when an e-commerce seller decides to outsource their fulfillment to a 3PL provider, the era of implicit decisions must come to an end. Instead, a new age of explicit actions begins. In this context, explicit actions refer to the formal documentation and clear communication of the processes, rules, and requirements that govern the fulfillment of their goods.

The Importance of Understanding 3PL Concepts

For e-commerce sellers to successfully leverage the expertise and capabilities of a 3PL provider, they must first develop an understanding of the fundamental concepts that underpin modern fulfillment operations. These concepts, such as barcodes, SKUs, locations, IUMs, and others, represent the variables and "instruction sets" that drive 3PL operations.

By mastering these concepts – and partnering with a 3PL that is capable of implementing them – e-commerce sellers can ensure that their fulfillment is efficient, accurate, and responsive to their business needs. This understanding also enables sellers to provide clear and precise instructions to their 3PL provider, reducing the risk of errors and misunderstandings that can lead to poor end-customer experiences.

Moreover, understanding these concepts allows e-commerce sellers to make more informed decisions about their fulfillment processes. It provides the means to identify opportunities for improvement and optimization. By turning unspoken assumptions and practices into explicit knowledge, sellers can gain greater control over their operations and drive continuous improvement in their supply chain.

How Our Series on Fundamental Fulfillment Concepts Supports This Transition

By breaking down key concepts and exploring their importance in modern 3PL operations, we aim to provide sellers with the foundational knowledge they need to confidently outsource their fulfillment processes and reap the benefits of working with a 3PL provider.

In the series, we dive deep into topics such as:

1. Barcodes and SKUs: Essential tools for accurate inventory tracking and efficient order fulfillment.

2. Locations: The critical role of warehouse organization in optimizing storage and picking processes.

3. IUMs: The importance of standardized measurement units for effective inventory management and reporting.

4. Orders and Shipments: The processes that underpin the successful execution of customer orders.

5. Containerization: The role of packaging optimization in reducing shipping costs and ensuring product protection.

By mastering these fundamental concepts, e-commerce sellers can develop a strong foundation for their outsourced fulfillment operations and unlock the full potential of their partnership with a 3PL provider.

In conclusion, understanding the distinction between implicit and explicit actions is crucial for e-commerce sellers looking to leverage the capabilities of a 3PL provider. By turning unspoken assumptions into explicit knowledge, sellers can gain greater control over their fulfillment operations and drive continuous improvement in their supply chain. Our series on fundamental fulfillment concepts is here to guide you through this journey, providing you with the essential knowledge and insights you need to confidently outsource your order fulfillment and grow your e-commerce business.

In the following posts, we'll explore some of the most important components of outsourced fulfillment. You will learn how each contributes to a streamlined and efficient operation, enabling the exceptional customer experiences and growth we all seek to see.