You can’t scan a publication, open an eblast or read an industry newsletter without seeing speculations about major disruptions to industry as we have come to know it. More than just an evolution of transportation technology, the very real threats to how, when and where we get product are converging to create a triple threat that is proving to be a staunch opponent to thriving commerce.
The Amazon effect is not only shifting how much product is being shipped to individual locations and how quickly it needs to get there, it has also led brick-and-mortar retailers to promise shortened delivery windows. As a result, suppliers need to adjust their lead times, shipment size and where they place their inventory.
Trickling down, this lands squarely on the retail suppliers and their carriers. Suppliers are struggling to comply with more stringent on-time-in-full (OTIF) requirements that carry significant cash penalties. Just when they need their carriers the most, the carriers are challenged with ELD mandates that limit driver hours and the dwindling supply of drivers.
Supply chain efficiency can only be maximized when it is the primary focus…and that’s when things are “normal” (as if that has ever happened!). In a dynamic climate like we have today, leaving this task in the hands of anyone less than a proven logistics whiz can be costly.
These trying times are a very real test of what a third-party logistics (3PL) partner can bring to the table. A 3PL can provide consolidation solutions to help you achieve OTIF and rise to meet the challenge of the Amazon effect. Through a strategic nationwide warehouse network, a 3PL partner can help ensure your product is near the retail distribution centers and shipping lanes it needs to be closest to in order to meet delivery requirements.
Through state-of-the-art technology, 3PLs provide visibility into the supply chain. With Transportation Management System (TMS) and Warehouse Management System (WMS) platforms, 3PLs can continuously monitor and therefore improve supply chain efficiencies through optimization. When it comes to capacity issues, 3PLs have access to a large network of carriers. Additionally, through carrier administrative processes, load matching services and back-office support teams, they can evaluate a larger cross-section of carriers more quickly. And because 3PLs offer a large volume of business to carriers they have greater leverage, which results in time and cost savings for shippers.
For organizations who have current 3PL relationships, it is time to step back and take stock. Really look at not only what your 3PL partner is doing for you, but HOW they are doing it. And what you are getting out of it from both a cost and headache-reduction standpoint.
For organizations who have been going at it alone, take the time to explore what benefits a 3PL could provide for your specific needs. Ask the tough questions. How much money could I save? How much time and what resources will I be able to reallocate to other facets of my business? What costs will I be able to avoid by leveraging your team? What solutions do you offer that I can’t handle on my own?
Not all 3PL partners are created equal: while there are a variety of trusted, proven and reliable resources available, not all of them are the right fit for every business. The key to maximizing the benefit of a 3PL is to stay the course for the long haul, so that as your partnership deepens, you see increasing ROI year after year—no matter how eventful or uneventful those years may be!
Three Things to Look for in a 3PL
Experience—look for a proven performer, who has real-world experience in driving costs out of the supply chain in your industry.
Technology—make sure the 3PL provider is investing in and innovating with new technology and tools that will help them and you get the visibility and transparency required to be successful.
- Culture—at the end of the day, it is the people on the front lines who will move mountains to meet your deadlines, so make sure your 3PL partner has a people-forward culture that stems from the C-Suite and that they place a high value on their employees through providing ongoing training and education, career advancement opportunities and a top-notch place to work.