Why a company selling industrial components started a 3PL business
The Fulfilment People (TFP) is part of the Spray People Group (SPG), a company specialising in spray nozzles and industrial spraying systems. SPG are distributors and value-added resellers of spray nozzles and other spray related systems. Essentially SPG sell components to an industrial and industrial customer base and offer value added engineering advice around spraying systems. This is a very different business from third party logistics so why is TFP, a leading 3PL provider, part of our group?
The story started some 17 years ago due to a problem. The issue SPG were having was that we could not get anyone to do 3PL well for us! Spray nozzles are important industrial components. They are used up in deep space and down deep in the sea. There are, however, some 40,000 potential variants in our catalogue. But they often look very similar to each other – they are small lumps of plastic and metal. To the untrained eye it is very easy to make a picking error. The consequences of such errors can be very severe: if the wrong nozzle is installed then the industrial process it is going into might not work. It’s not like a picking and shipping the wrong consumer product, the cost of error is much much higher.
In addition to this, some spray nozzles need some sub assembly work. Despite being assured that this could be done well by several vendors, we found that this was not the case. Errors were common and we wasted a huge amount of time and effort speaking to annoyed customers trying to work out what had happened. Even more frustrating wast that the returns process from those errors could not be guaranteed to run smoothly so nozzles ended getting mixed up with other very similar looking nozzles. It was a mess.
The Problem: When 3PL Fails, Business Suffers
SPG relied on 3PL providers to store, pick, and pack its highly technical components. With over 40,000 product variations that often looked identical, accuracy was critical. However, traditional 3PL providers struggled with:
- Picking errors that led to costly operational failures
- Poor handling of sub-assembly work
- Inefficient returns processes causing mix-ups
After cycling through multiple vendors and dealing with endless customer complaints, SPG had no choice but to take warehousing in-house – something that was never the original plan.
We went through several 3PL vendors before bringing the warehousing in house due to this frustration. This was never the plan; the original concept was not to actually touch the product. We are, essentially, engineering geeks who specialise in the niche of spraying systems. Logistics, picking and packing was not in out skill set. So, the plan was to have another company who did have that skill set do that for us and do it better that we could. But due to the intricacies and difficulties of conducting 3pl for small industrial widgets this proved to be impossible.
Realising a Market Need: High-Care 3PL for Complex Products
After some time of in-house warehousing we reasoned that there simply must be other companies in our position. There are lots of industrial widget sellers out there who must have the same frustrations, and we were pretty sure that quite a lot of them would like to outsource their warehousing and logistics. So, we decided to form The Fulfilment People (originally named Technical Fulfilment).
Our instincts turned out to be correct but not quite in the way we envisaged. We found that it was not just people like us selling technical components that needed “high care” third party fulfilment. There turned out to be many other companies out there with 3PL requirements that were not served well by existing providers.
The Industry-Wide Problem: Much 3PL Lacks Accountability
Whilst the specific pain points being experienced by different customer varied, they all boiled down to one simple concept – a lack of accountable relationships. Many large players in the 3PL business were faceless entities. The relationship was transactional and process driven, if everything went according to plan the service would be good and efficient. But as soon as a customer had more complex needs, or variability in their needs then these faceless, transactional relationships no longer worked well.
When a customer needed a human being to engage their brain and solve a problem, that was when things went wrong. The reason for this was simple, in the drive for efficiency and scale, these companies had emphasised the system over the human being. The system was king, and systems can’t really think or innovate. So, when something unexpected happened, the system would fail to adapt. In contrast when an accountable human being is in charge adaptations can be made and common sense can prevail.
The TFP Solution: People Over Processes
Our solution to this was quite simple really: employ good people, empower them to make decisions and then put them in direct contact with their customers. So, when at TFP each of our pickers and packers are also the account managers. They pick and pack for the same small set of accounts each week, so they form a relationship with each of their customers. Customers have a named contact, who they know that they can call directly to solve whatever issue needs to be solved.
This was the logical solution to our own 3PL problems with our spray nozzle business back in the day and it turned out this was also the solution to many other companies’ similar problems. The only surprise to us was that that most of the customers we acquired were actually “non-technical” companies selling a variety of consumer products. We had assumed that our niche would be companies selling technical products, but it seemed the issue was wider than that. In recognition of this the company name adopted the trading name The Fulfilment People rather than the original Technical Fulfilment.
TFP – an Accountable 3PL Customers Can Trust
TFP has now become a successful 3PL provider with a diverse range of customers. Yes, we still have B2B “technical” component sellers on the books but also toy companies, cosmetic companies, clothing companies, corporate merchandise companies and many more. As diverse as our customers are, what unites them is the need for a 3PL provider that they feel safe with and who they know they can call to solve an issue. At the end of the day our business model is about having a high accountability culture that customers can trust.