3pl warehouse contract template

Uneven relationships are rarely sustainable if one party of the other feels that they are not getting value commensurate with their cost and commitment. The following tips can go a long way in ensuring that both client and 3PL are satisfied with the details of the warehousing contract.

Contracts are cold, hard, legal documents. But ironically, the best contracts result from demonstrating some basic human traits during the negotiation process: honesty, fairness and good communication.

At Weber Logistics, we go to great lengths to develop and maintain mutually beneficial partnerships that lead to long-lasting logistics solutions. To learn more about working with a 3PL as a true partner, contact Weber Logistics today. Disclaimer: The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice.

You should contact your attorney to obtain advice with respect to any particular issue, question or problem. WEBER Track Shipment Login. West Coast and California Logistics Blog. This can derail a relationship if issues arise down the road. Clients may pass the contract through their attorney, who may not understand the context or nuances of the 3PL services that are required as well as the client does.

The contract can come back with 30 redlined comments that can trigger weeks of time-consuming discussions. Key warehousing contract provisions Warehouse Liens A lien protects a 3PL from non-payment of invoices. Your email address will never be shared with any 3rd parties.

Nor will we send you unsolicited email. The supply chain of today is, in a word, complex. From globalized sourcing and omnichannel demand to disruptive events and ever-rising Hello and welcome to the Legacy Monthly Shipment, your trusted source for all things supply chain and logistics news, insights and Tweet Like Share.

Non-Disclosure Agreement In order to protect all parties involved in this strategic endeavor, the first step in the process should always be a non-disclosure agreement NDA. Term of Contract Similar to schedule, this item sets an expected timeline for the duration of your relationship with a 3PL provider; this can range anywhere from a few months to years, depending on the nature of your fulfillment needs.

Pricing Different 3PL solutions come with many different pricing structures — cost-plus, transactional, fixed variable, fixed variable with incentive and so on. Response Requirements To get exactly what you want out of a third-party logistics provider, you need to be specific about your expectations.

Current Business Operations In order to craft custom solutions, services and strategies that meet your fulfillment needs, prospective third-party logistics partners must first understand the current state of your business. Service Requirements This is your opportunity to outline partner expectations as they pertain to specific Service Level Agreements.

Culture [Bonus Section] When it comes to finding the right 3PL provider, you might not give much thought to company culture — after all, things like product delivery philosophy and positive references likely seem more important. To keep it simple, look for insight from a cultural perspective on these four critical areas: Core Values: Companies whose values align are more likely to have successful, sustainable business partnerships.

Commitment to Safety : Look to for a 3PL provider with a proven commitment to safety, dedicated resources and that takes its awareness and communication programs seriously.

Leadership Development : Strong leaders create strong supply chains. From a legal standpoint, your attorney will review and guide your thinking on damages.

The agreement might specify that neither party shall be liable for the following damages:. Loss of inventory due to vendor negligence is often limited to a percentage or specific dollar amount of the cost and will have a cap per incident.

Other damages may be limited to the amount paid for services. Remember that inventory is one of the largest balance sheet assets in retail and ecommerce businesses.

Most agreements state that the inventory is purchased by the client for their use in selling to the customer. The client carries insurance against loss and casualty. The client also pays for transportation directly from the vendors, unless otherwise agreed upon with the client. The 3PL may reserve all rights and remedies under applicable law. The 3PL also has no responsibility for claims or warranties involved with the product.

When product recalls are necessary, the 3PL will be notified immediately and recalls conducted quickly. Early on the client and the 3PL should have signed a mutual non-disclosure agreement NDA to protect detail discussion of the project and 3PL capabilities. The contract often has different wording from the earlier, standalone NDA. Agreements should define your intellectual property, including but not limited to:.

When in doubt, clearly label all of your company's copyrighted and confidential materials. Is the advanced payment purely a pass-through or is it marked up e.

Replenishment of these funds is generally payable upon receipt. Some 3PLs invoice weekly; others monthly. What are the payment terms — upon receipt, Net 15 or Net 30 days after receipt of invoice? Are there late fees and interest charges? In extreme cases of slow payment, 3PL may reserve the right to stop processing and shipping until all payments are made.

Does the contract specify payment by check or electronic funds transfer? A client should reserve the right to audit and review invoices for their account. Some 3PL invoicing systems are very easy to understand and cross foot transactions for services and rates, as well as hours worked by the activity.

Others are very difficult to clearly understand and may require 3PL assistance monthly. Generally, the client is required to pay the undisputed portion of the invoice and cannot hold back the entire invoice.

What is the billing resolution process in your contract? The agreement will specify the method of settling legal disputes, either through arbitration or the courts. Many companies use arbitration because arbitration has the full force of the law and it is less expensive.

Because the 3PL is the seller, it has the choice of which state legal proceeding and arbitration are subject to and held in. Inventory losses can occur from paperwork problems, computer issues, processing errors, and theft. Many 3PL inventory systems and processes are fully barcoded and have high accuracy. The agreement should have a shrinkage loss specified, typically up to 0.

What this means is that the client will absorb the first 0. This is generally calculated on an annual timeframe based on actual cost. But, monthly inventory accuracy accountability, such as inventory audit trail of adjustments, will allow you to have a better handle on any inventory losses. The 3PL is not responsible for the negligence of client, agents, or shipping companies in handling inventory.

Some forms of marketing, like DRTV or infomercials, can generate high spikes in orders. Other industries may experience holiday peaks that are 10 times higher than their average week. Keeping promotional plans and order levels projections are standard in most agreements. Generally, there is rolling a week sales order forecast financial quarter so that the 3PL can plan staffing.

Consequences for inaccurate forecasts include:. In practice, there should be a weekly call to discuss promotions, anticipated orders, and inbound receipts. If there is a significant decline in processing volume, there may a remedy for the 3PL, such as proposing new pricing.

How much notice does the client have to give to visit the facility? The liaison for both the client and the 3PL are very key. Can either ask for the account manager to be replaced if there is justification? What insurance will each party keep in force during the agreement? What is their dollar coverage? Typical insurances include:. Is there a waiting period to hire after termination? The 3PLs are independent contractors, not partners or joint venture partners unless otherwise specified.

This is an area where you will want to consult your lawyer. Examples are acts of God, labor disputes, breakdown of facilities, government action, and weather. This includes any concurrent systems backup of data and other major potential failure points. This is another area where your attorney knows best.