A lean and efficient supply chain can make a huge impact in your organization’s ability to grow and be profitable. However, today’s supply chain landscape is pretty complex, and it can be difficult to know what changes to make in order to optimize your supply chain. You might be surprised to know that a 3PL (Third Party Logistics) provider can make a world of difference. How? Keep reading to learn five different ways that a savvy 3PL can improve logistics effectiveness.
- Transportation insights. The right 3PL will have “insider” transportation information that you likely don’t have. The transportation element of the supply chain is ever-changing and complex, with lots of moving pieces, varying rates, and levels of quality and service. Shippers know and understand these components and how they all work together. A 3PL has many clients with various products, using different carriers, to go different places. Because of this, they are able to understand and benchmark things like cost and service quality. A 3PL will have diverse and comprehensive experience across transportation, which they can apply for their clients in the form of better service. They’ll also have more negotiation and management expertise, which allows them to achieve things with carrier partners that independent companies might not be able to. Plus, all this experience leads to a kind of intuition when it comes to transportation, so they will make faster and better decisions regarding carrier selection, availability, measurement, analytics, and technology tools.
- Real-time visibility. Supply chain logistics have so many moving parts. Carriers are always on the go, navigating challenges like weather, traffic congestion, etc. Warehouses manage inventory that’s been handled several times throughout transit. Most parts, inventory, and packages also travel with other material and shipments. That means there is a lot of opportunity for things to go wrong, and it’s incredibly helpful for organizations to be able to see what’s happening with their shipments. Think about how impactful it could be to have real-time transparency into overall supply chain movement. Seeing where something is at any given moment, when it will reach its next stop, and ultimately when it will reach the customer is a powerful tool that can be used for better end-user experiences as well as optimization of your overall supply chain. The best 3PLs make this form of transparency possible, offering insight into the overall process to enable more control.
- Better decision-making. All that visibility we just mentioned enables the ability to make smarter and faster decisions. In order to make decisions quickly, you need to have all of the information regarding your supply chain available. For example, if you know there are 500 orders out to customers, are you able to see the 10 that are at risk of not reaching their destination in time? Of those 10, could any of them cost you future sales? If so, what options do you have to fix the delivery problem? Better visibility will allow you to focus on the right priorities. Using data will enable you to find the best ways to spend your transportation budget and provide key decision criteria for other decisions. Plus, having real-time information regarding the rates of multiple carriers and options will provide flexibility that can improve your bottom line.
- Supply chain is its own industry. Chances are, no one knows your specific industry better than you, because you are immersed in it every day. The same is true of logistics. A good 3PL will seek to understand your industry, and then match those needs to the right supply chain resources. They have a thorough understanding of the full supply chain landscape, and can leverage their own tools, capacity, and experience to improve your outcomes. It’s not necessary for a 3PL to have deep knowledge of their client’s industry (even though it can be helpful). Instead, their real value comes from the insights they can offer into their particular supply chain and how to maximize it for competitive advantages.
- Mapping value to service. The right 3PL for you will map value to service. What does that mean? A strong 3PL will take the time to learn and understand their client company and their shipments, and then create a baseline (or starting point) to measure against. Then they will implement the best choices in carrier, service, mode, route, price, etc. Finally, they’ll use those tactics to move the supply chain needle, bit by bit. At the end of the day, all of these steps lead to value, measured in a real way against the baseline that was established. This framework allows value to be mapped and recognized, which makes ROI apparent and easy to understand.
If you are considering working with a 3PL, think about the ways that doing so can add true value to your overall supply chain and your organization’s bottom line. A solid 3PL relationship will help you turn your supply chain into a competitive advantage.