Online Order Fulfillment: A Summary Comparison of MonarchFx with 3PL Common Practices
Gene Tyndall, President
Bruce Tompkins, Chief Operating Officer
Sellers of products online, when selecting a fulfillment provider, are asking how MonarchFx compares to contracting directly with a 3PL. This article summarizes the critical success factors that should be considered and how the respective solutions compare.
MonarchFx is an alliance of selected logistics partners that work together, providing a seamless total fulfillment operation for each seller. There are currently three logistics service providers (3PLs) that have been selected for their operational experience handling small orders and frequent shipments, doing both effectively.
We would like to emphasize that this piece is in no way a criticism of 3PLs in eCommerce or any other operation. Several are experts at these operations, many are changing to catch up and compete with the fast-paced growth in online order fulfillment. Rather, it is a comparison of the MonarchFx solution with the direct contracting of a 3PL independently.
For readers who may be unfamiliar with the current operations model of MonarchFx, following is a summary of its key solution features:
- Distributed logistics imbedded Fulfillment Centers (FC) with existing selected 3PL’s.
- Unique robotics for sortation unit and parcel that can handle thousands of packages per hour.
- Four FC operating today (SoCA, Columbus, Atlanta, Dallas) with many more to open in 2019 and beyond.
- Multiple sellers accommodated in each FC.
- No capital needed for a seller.
- Delivery partners include UPS (one and two day) and Delivery Circle (same day).
- Intelligent advisory services on inventory allocation and replenishments.
- Flexibility for sellers, selecting their preferred FC locations and can expand as needed.
- Rapid start-up and on-boarding of sellers.
- Competitive pricing with all-in unit costs.
The following are seven critical success factors for sellers to consider in selecting a partner for online order fulfillment, together with relevant summary comments that characterize the respective solution sets:
|Major Criteria||MonarchFx (MFx) vs. Direct 3PL’s|
Cost and Productivity
|MFx unit price includes all costs and fulfills high volumes
3PL uses cost + fee or unit cost with add-ons
|MFx performs at 95%-98%
3PL typically at 80%+
|Risk Management||MFx composed of Best-in-Class partners, full capital protection
3PL typically limited capital
|Nationwide coverage||MFx distributed logistics model covers the U.S.
3PL limited to its sites only
|Power of Technology||MFx has superior information technology
3PL limited to what it currently operates
|Degree of Automation||MFx provides, with no capital needed, patented sortation robots and other material automation
3PL limited on automation unless seller invests
|Assistance with Inventory||MFx provides, at no charge up front, optimization intelligent advisory services, on demand forecasting, and initial allocation and replenishment
Some 3PL’s advise on inventories, but not in depth; and, not on forecasting
There are other comparisons that can be made including flexibility, expansion, speed of start-up, and operational excellence, due to the alliance of the best, along with MonarchFx operations leaders that oversee and advise on continuous improvement with best practices.
One important additional factor is the revenue gains that come from distributed logistics, which is the fundamental operations model of MonarchFx. As FC are opened around the U.S., sellers have the ability to locate selected stocks closer to customers. This is a critical success factor in boosting sales, rapid delivery of orders, with operational excellence. MonarchFx leaders and a financial expert have co-authored a thought leadership paper that describes this phenomenon and changes traditional thinking, Achieving Revenue Gains from Distributed Logistics.
Further, to those sellers who might be concerned about the over-stocking of goods to multiple FC, the inventory optimization intelligent advisory services mentioned above precludes this concern. State of the art demand forecasting by location, coupled with smart replenishments, assures sellers that safety stocks are minimized and in-stocks are maximized.
All things considered, sellers obtain more advantages than contracting directly with a 3PL. The comparisons discussed above emphasize these benefits, which all come at unit prices that include the benefits, while equivalent to commonly quoted rates.
- Video: Creating Competitive Advantage
- White Paper: Achieving Revenue Gains from Distributed Logistics