Electronic Retailer - July 2012 - (Page 36)
BY CLYDE MOUNT
10 Reasons to Consider a New 3PL
Especially in the direct response industry, where demand can be volatile, one of the most beneficial partnerships can be with the right third-party logistics (3PL) firm. Charged with managing labor, processing orders, managing inventory accurately, organizing, warehousing and shipping of clients’ products, your 3PL’s ability to scale to meet demand, and at the same time keep your costs under control can make or break your campaign, or even your business. And with 3PLs’ offerings expanding rapidly, it makes sense to ask yourself every now and then if you are working with the best partner for the job. The Council of Supply Chain Management Professionals (CSCMP) defines a 3PL as “a firm [that] provides multiple logistics services for use by customers. Depending on your partner, these services can be a la carte or integrated and bundled together by the provider. Among the services 3PLs provide are inbound logistics, reverse logistics (returns), cycle counting, warehousing, cross-docking, packaging, transportation and freight forwarding.” Increasingly, the best 3PLs are providing high-level order management systems that oversee customer orders, but are tightly integrated with inventory, carrier, manifesting and customer delivery management. They also provide cost containment strategies that can reel in savings for your company regularly – leaving you with time to focus on your core business. However, according to Capgemini Consulting’s 16th Annual State of Logistics Outsourcing Study published in 2012, while clients view their 3PL relationships as generally successful, only 71 percent claim that their 3PL provided them with new and innovative ways to improve logistics effectiveness, and only 68 percent judged their 3PLs as sufficiently agile and flexible. So how do you know if a switch in providers might serve your business well? Below is a list of the top 10 reasons I have heard clients use for explaining their move to a new 3PL partner.
1. Your current 3PL isn’t providing cost containment strategies.
According to the same Capgemini study, only 26 percent of customers feel 3PLs can help them improve distribution center processes as a cost-saving strategy, the top ranked way they believe 3PLs can assist them in lowering costs. Everyone has inefficiencies within their supply chain, but your 3PL should be able to record these practices, report them to you on a regular basis and – if they are so empowered – take corrective action.
should be able to provide ramp capacity quickly, in a way that can be fine-tuned to fit your changing needs. One of your 3PL’s core competencies should be the ability to add capacity and labor quickly, and when approached with the proper analysis, planning and discipline, even the most unexpected demands can be handled smoothly and efficiently.
3. You want to reduce your software investment and operating expense.
Your 3PL should make it possible for your business to free up cash, improve its P&L, balance sheet and ROE by reducing the amount of infrastructure and capital investment needed in equipment, software, facilities and personnel. You should feel comfortable knowing your 3PL is handling all the paperwork, billing, audits, training, staffing, investments in technology and communication with carriers to get your products where they need to go, undamaged and at the best possible cost.
2. You are unsatisfied with your ability to quickly increase capacity to deal with unforeseen events or market opportunities.
In the realm of DR, demand is driven by consumer behavior and other forces, meaning demand for capacity can be volatile. To avoid excess cost, inefficiencies, missed sales, unhappy customers and excessive returns, your 3PL
While it’s true that no 3PL is perfect, there is a 3PL out there that can fit your business needs perfectly.
electronicRETAILER | July 2012
Table of Contents for the Digital Edition of Electronic Retailer - July 2012
Calendar of Events
Your Association Your Bottom Line
IMS Retail Rankings
Jordan Whitney's Top Categories
From the Executive's Desk
Cover Story: Could You Sell Like Amazon?
Counterfeiting: Why We Should Care and What We Can Do
All Media Are Not Created Equal
Electronic Retailer - July 2012