6 Considerations When Launching a 3PL Program
It’s something we see all the time: a manufacturer has decided to leverage a third-party logistics (3PL) provider but isn’t sure how to manage what comes next. Maybe they’re a virtual manufacturer or a small company seeking to bring their first product to market. Or maybe they already have an existing 3PL and are looking to make a change.
Either way, when taking stock of the 3PL landscape and available options, there are a handful of key components to keep in mind, both tangible deliverables 3PL providers must acquire or adhere to and intangibles that may not have been considered prior to implementing a program.
We asked new Archbow team member, Shannon Hybner, to share her expertise on the essential components manufacturers should consider when launching a 3PL program. Shannon has extensive, hands-on experience guiding commercialization strategies for specialty distribution and third-party logistics. She’s worked across numerous product types and unique channel solutions, including Cell and Gene Therapies, and now shares her first-hand knowledge with Archbow clients. Learn more about Shannon here.
6 Considerations When Launching a 3PL Program
Tangible 3PL Components for Consideration
1. Begin the 3PL selection process 18 months ahead of launch. Launching a new 3PL program actually begins with the provider selection process, which we typically recommend starting 18 months ahead of your targeted launch date, depending on program complexity and number of third-party stakeholders (e.g., connectivity to external HUB and pharmacy providers).
Why does launching a 3PL take so long? Onboarding a 3PL is typically the beachhead that drives downstream setup activities with your intended wholesalers, specialty distributors, pharmacies, etc. Since a 3PL program involves oversight into all aspects of initial warehouse operations and order-to-cash management, the sooner you begin looking for a partner that best fits these needs and aligns with your company goals, the better they can serve you throughout the commercialization process.
2. Learn Your Options & Make a Model Decision (Early!). Non-title vs. title, temporary title vs. flash title, dropship vs. direct shipment…what do all these terms even mean? How do I know which supply chain model is right for my program? While there isn’t a cookie-cutter answer (wouldn’t that be nice), the differences define how you manage state licensure, make money from your product sales, and the physical journey your product takes. Until a model decision is made, your 3PL provider is limited in the implementation activities they can perform, so enlist them to help you understand your options.
Should you select the standard 3PL model, your company will also need to determine how you will manage your state license applications and renewals, whether managing in-house or leveraging a third party. Many state licenses take months to acquire, so the earlier license applications are submitted, the better.
3. Do Your Research on Who’s Out There. Whether conducting RFPs or interviewing a small subset, ensure your 3PL selection process includes providers sharing the latest available capabilities and detailing their future growth strategies. Compare those capabilities with your therapy requirements and goals, first ensuring the deliverables align well with your program needs from day one.
While most 3PL providers offer similar pick, pack, and ship capabilities, it’s vital to double-check that the tangible, operational requirements of your program will be met. Not all therapies are created equal, and no one understands your product needs better than you.
Intangible 3PL Components for Consideration
1. Ensure the Right Fit with your Program Manager: Trust is key! A 3PL provider will have visibility on all your product/program activities, and your designated program manager (PM) should know your program backward and forwards as they oversee the management of all order to cash and operational activities.
Post-launch, you won’t be calling your PM to talk about everything that went right. Instead, you’ll be discussing the unexpected. Obstacles will occur, and you want someone in your corner who is proactive vs. reactive and is responsive, understands all aspects of the business well enough to quickly identify root cause and can implement a sound solution.
If your PM doesn’t boost immediate confidence in how your program/product is being managed, or if you and your designated PM aren’t on the same wavelength, your daily interactions will always be stilted.
While a PM may not be on the warehouse floor, they can be your biggest advocate and make a huge difference to the success of your business long-term.
2. Put it in Writing. What are your day-to-day program expectations? Sales phase conversations typically only capture high-level operational specifics before a program manager or implementation team is expected to interpret. Instead of relying on the 3PL’s interpretation of “Customer Service,” capture your own expectations and begin the dialogue to verify alignment.
Do you want custom processes to meet company expectations? Great! Share your thought process and have your 3PL put it in writing. This can include a detailed SOP, work instruction, business rules document, or even a one-lined email your 3PL will incorporate into their existing SOPs. The key here is to never assume both stakeholders are on the same page unless it’s actually written on the page. Without clear direction detailing otherwise, 3PLs will follow their internal standard processes. So speak up!
3. Get to Know Your Data. Before launching a program, it’s easy to nod along through a portal demo or EDI field walk-through and fundamentally understand what’s being made available. Inventory on hand? Check. Sales numbers? Double-check.
But then, once a program is live, the application of the myriad of reports at your fingertips becomes much more nefarious to sort through. What’s the difference between all these chargeback reports? Where can I find returned product levels? Can my 3PL create the custom detail I’m looking for to meet my immediate needs? Not all essential reporting fits nicely within standard 852/867 data feeds, and that’s okay!
A great 3PL partner will help you dig through the weeds of their report offerings, simplifying the understanding of each, identifying most-used reports, and walking you through details that will best serve your month-end close activities.
If you believe you need a custom creation, identify what data would make your life easier and ask your 3PL about it. Chances are, they already have a version of this report available and can walk you through its nuances. Hold your 3PL partner accountable for teaching you more about the data you’re already paying for and decreasing your own manual workload.
While these callouts are by no means exhaustive of attributes to consider when selecting and engaging your 3PL partner, they’re a springboard to begin your conversations. The next time you’re preparing to launch a 3PL program, Archbow can help. We have a team of distribution experts that can support vendor identification, contracting, and program implementation. Contact us today to learn more.
Archbow Consulting helps pharmaceutical and biotech companies in the USA and Europe design, build, and optimize product distribution and patient access strategies. Archbow was founded by industry veterans to meet a need in the marketplace for consulting options that offer diverse real-world experience, are able to leverage deep connections across the industry, and can also provide actionable strategic guidance. We invite you to learn more about our team, services, and clients’ success, and connect with us via email, LinkedIn, Twitter or subscribing to this blog which you can do below.