How 3PLs Help Mitigate Supply Chain Risk

The global and complex nature of today’s supply chain makes it susceptible to a wide variety of risks and disruptions. Research from the Business Continuity Institute states that 51.9% of organizations experienced supply chain disruption in 2019. Whether caused by fires, political unrest, or hurricanes, supply chain disruptions can impact your supply chain and business negatively. The research states, 41.5% of companies with supply chain disruptions received customer complaints, and 36.1% lost revenue. One way you can mitigate supply chain risk is by working with third-party logistics (3PL) providers. Here are four ways a 3PL can help you to mitigate supply chain risk.

Supply Chain Visibility

Supply chain visibility allows you to see where supply chain goods and materials are physically located and quickly respond to any shocks to the chain.

To have accurate real-time supply chain visibility, you need advanced technology solutions. This is where 3PLs come in. 3PLs have advanced technologies that give shippers real-time visibility across the end-to-end supply chain and enable them to see their risks. Below are two technologies a 3PL can support you with to improve your supply chain visibility. 

  • Digital Control Tower: Digital control towers enable companies to collect and analyze data in real-time across the supply chain and identify developments that might affect their operations. Based on these analyses, shippers can mobilize a response when necessary.
  • Predictive Analytics Platforms: Predictive analytics platforms are powered by real-time data and help shippers identify known risks, and predict future risks by spotting patterns and trends throughout the supply chain. With this tool, you can get insights into potential supply chain disruptions and put back up plans in place before these events occur.

Quick Tip: When using data-driven platforms such as digital control towers and predictive analytics platforms, make sure you have access to clean and accurate data. This will help you make better data-driven decisions.

“It’s been helpful to have a partner who can handle the warehouse and logistics side of our business for us. I think the team is very knowledgeable. They bring experience fulfilling to different retailers that has made this a very steady area of our supply chain, from launch until now.”

Jim Thome Head of Operations, Rylo

Cross Border Trade Management

Thanks to advances in technology, cross border ecommerce is the new normal. With consumers purchasing millions of products across borders, cross-border ecommerce growth is twice as high as the rate of domestic ecommerce.

While cross-border ecommerce is profitable, shipping parcels to consumers across the world comes with the problem of cross border delays. 51% of shippers cite issues such as border delays as causes of disruptions according to the 2019 23rd Annual Third-Party Logistics Study. These delays can lead to late delivery and have a negative effect on customer experience. You can avoid cross border delays by outsourcing global supply chain cost decisions to 3PLs. 

International 3PLs offer customs brokerage and trade compliance services that help online merchants cut through trade barriers, and ensure on-time border crossing of shipments. This takes the burden of administrative work from your hands and allows you to focus on other important aspects of your business.

Additionally, international trade is governed by a myriad of changing regulations that shippers need to understand. Failure to understand and comply with these regulations often causes shipment delays. 41% shippers cite a significant change in export/import regulations/requirements as a disruption.  

3PLs offer customs clearance services for different modes of transportation to enable shippers to comply with regulations, avoid expensive delays and penalties. 3PLs also provide tariff and trade consulting to help shippers identify opportunities, mitigate risks, and ensure correct duties and tariffs are paid for shipments.

Quick Tip: Ensure you collaborate with a 3PL that has proven expertise in in-country regulatory requirements of the foreign markets you ship to. Also, consider working with a 3PL with links to industry associations and government agencies, so that you can stay up to date on regulation compliance, tariffs, and trade agreements.

Risk Management Solutions

Risk management platforms powered by big data analytics and machine learning can provide you with a clearer picture of where potential supply chain risks lie and how you can avoid disruptions. 

If investing in proprietary risk management technology is expensive for your business, you can turn to a 3PL.   

3PLs offer risk management solutions that map and visualize supply chain operations, identify risk hotspots, and recommend suitable mitigations for immediate recovery. These risk management solutions can also track multiple categories of near-real-time risk events across the world, like production stoppages, and automatically alert shippers to those that have the potential to affect their supply chain.

Quick Tip: When picking a risk management solution from a 3PL, ensure that the tool interfaces with common business systems, is user friendly, scalable, and provides visibility throughout multi-tier supplier networks.

Inventory Management

Not having the right amount of products can cause overstock and out of stock problems and ultimately affect a company’s bottom line. For the majority of retailers, the combined impact of overstocks, out-of-stocks, and preventable returns add up to 11.7% of lost revenue

However, by working with a 3PL, shippers can adequately manage their inventory and avoid disruptions. 3PLs offer inventory tracking solutions that allow shippers to view the status of their inventory, track inventory change over time, and put contingency plans in place for potential inventory problems. 

Also, considering the fact that it can be difficult to predict consumer’s demand for products, 3PLs leverage predictive analytics platforms to forecast inventory needs and accurately detect customer needs. Thereby helping shippers to reduce unnecessary inventory and enabling them to operate more efficiently during hectic periods.

Navigate Geopolitical Events

Geopolitical events such as trade wars, workers’ protests, and political unrest can disrupt transport networks and impact supply chains. The 2019 Business Continuity Institute Supply Chain Resilience reports that 43.7% of business executives are concerned that political change will be a potential risk to their supply chain.  

You can minimize the risk caused by geopolitical events by working with a 3PL. A good 3PL will likely  be able to keep you informed of any geopolitical situations that might arise in the region you operate in, and help address the potential impact on your supply chain. The intelligence provided will help you to re-evaluate your risk environment and provide you with the insights you need to adapt your networks, protect your supply chain, and ultimately your bottom line.

In situations where you might need to diversify your supply chain across a global network due to geopolitical events, 3PLs can help you plan, build, and optimize a flexible supply chain. 3PLs can also conduct risk assessments to help you to understand the complexity of risks you face in your local operating environment, identify localized route risks, and develop plans to ensure business continuity.

Bottom Line

Mitigating supply chain risk is important to ensure your supply chain keeps rolling and customers get their deliveries on time. While there is no silver bullet strategy for protecting your supply chain against threats, having a 3PL by your side can help you minimize the impact of disruptions and ensure you remain in business no matter what comes your way. 

If you are looking for a 3PL partner to work with we would love to hear from you. 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. Send us a note to connect about how we can help your company grow.