Every year, thousands of ecommerce companies consider outsourcing to a third-party logistics (3PL) provider. Many of these companies are looking…
A supply chain, at the most basic level, is a network which strategically manages the flow of material, money, and information from suppliers to their end customers. To attain an efficient supply chain, collaboration amongst all entities is required. In the past, many functions were handled internally and third-party logistics providers were used for traditional services like freight forwarding, transportation, or warehouse management. However, the rapid pace of innovation within logistics and the opportunities for improvement in 3PL services have pushed 3PL providers to evolve from providing simple logistics services to more comprehensive core competencies. In today’s e-commerce market, 3PL companies have redefined their role based on the strategic coordination of their customers supply chain activities—the services they provide have become key ingredients in a successful supply chain management. 3PLs are delivering more value by becoming a key partner to their customers and contributing to their competitive advantage in order fulfillment.
Integrated Logistics Relationship
Smart businesses understand a healthy relationship between different 3PL partners will keep their supply chain effectively integrated. An integrated logistics relationship garners better results than any one single partner in the supply chain can provide. 3PL collaboration plays a crucial role—each participant across the supply chain works to solve problems together, planning processes more efficiently, and continuously improving. By engaging in integrated logistics relationships with suppliers, manufacturers, and retailers, 3PL companies are able to communicate on a regular basis to make improved inventory management and distribution plans, and solve problems together for the benefit of the customer. Leading 3PLs are likely to use a collaborative approach—to share and receive information that will improve the overall network of a supply chain.
A successful supply chain is positively impacted by a professional 3PL provider that is flexible and can assist with fluctuations in business. From seasonal volume instability to tight deadlines, a 3PL is likely to go beyond the logistics management and supply chain operations. A proactive, customer-focused 3PL provider will have a deep understanding of their customers’ business and be able to assist with streamlining business processes and make them more efficient and effective.
Build a Demand-Driven Network
Poor synchronization with partners can lead to an underperforming supply chain that exhibits longer lead times, higher freight forwarding, trucking and transportation costs, and lost sales. An expert 3PL provider is likely to assist your business in achieving greater supply chain resilience by building a demand-driven value chain that serves the consumer by modeling partners and logistics companies from upstream to downstream of a supply chain. Moreover, 3PL consulting services can also assist you to determine where your supply chain can be differentiated to better suit the requirements of your business.
Innovation and Creativity
Smart businesses know 3PL providers have built a sustained market presence based on their creativity, ingenuity and their ability to deliver innovative supply chain solutions. Innovative solutions are likely to include cutting edge technology, such as an integrated Warehouse Management Systems (WMS) and Electronic Data Interchange (EDI) solutions, both of which work to deliver real-time, accurate data, and lower the number of IT personnel needed within the customer’s business. Another way 3PLs can add value is by reviewing and possibly reconfiguring their customer’s delivery, distribution, transportation management and reverse logistics. Collaborating with your 3PL provider for innovative and creative solutions can assist to develop more resilient and efficient processes, thus making your businesses both swift and effective.
A 3PL Will Help Spread Out Your Financial Risk
There are many decisions that require a large, upfront capital investment and bear financial risk—like setting up or rearranging warehousing, implementing new software system, and more. In comparison, choosing the services and networks of an established 3PL and integrating your supply chain can reduce your business risk and reduce the investment required. Leading 3PLs spread out risk by outsourcing to subcontractors for some of their services. Expert 3PL providers are likely to be able to deliver a cost advantage through sharing resources, combining volume for freight forwarding discounts, and increased shippers.
By collaborating and working together, 3PLs can drive more value, efficiency, and lower cost into their customers’ supply chains. 3PLs can ensure improvement, innovation, and visibility for business by effective collaboration. 3PL providers are increasing their role in working with their customers and many businesses are able to realize more supply chain value by working with 3PL providers that understand their business, collaborate with them and the other 3PL providers involved within the customers’ supply chain.
If you are looking for help managing your supply chain and logistics, send us a note to connect about how we can help your company grow. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support.