Opinion: Partner With a 3PL
By Ron Cain
President and CEO
TMSi Logistics
This Opinion piece appears in the Aug. 30 print edition of Transport Topics. Click here to subscribe today.
A key concern of savvy business owners is getting their product to market as efficiently as possible. A common misconception in supply-chain management is that a warehouse operation comes with “necessary” inefficiencies. It also is incorrect to assume that fixing supply-chain problems always requires a huge investment of time and resources. The truth of the matter is that many improvements can be made at relatively low costs with a high return on investment.
Not sure where to start? Because most successful companies must focus on their core competencies to remain profitable, partnering with a qualified third-party logistics provider is often the right step for companies that are ready to take the leap toward achieving sustainable business growth and a healthy bottom line.
Through lean workouts and collaborative meetings, a qualified 3PL will provide a strategy that will improve your warehousing operations. This strategy will include one or more cost-cutting improvements — an example of which may be a customized packaging solution that is practical and cost-effective. An experienced 3PL will be able to give real statistics on success rates and expected savings, as well as proven methods of seamless integration. If your 3PL is worth its salt, it will be able to steer you toward solutions that make sense for your business.
• Solution 1: Cross-Docking
Capacity issues, customer demands and inbound/outbound logistics are some of the greatest challenges facing the marketplace today. One practical solution is cross-docking, which has resulted in significant improvements in transporting and warehousing goods.
Effective cross-docking is defined by the Food Logistics Industry Report as “the practice of receiving goods at one door of a facility and shipping out through the other door almost immediately without putting them in storage.” Effective cross-docking has become a staple in warehouse management. The report showed that 43% of respondents had increased their cross-docking practices in the past five years. While cross-docking schemes are common for 3PL experts, many companies not versed in supply-chain management do not have the expertise to realize the cost savings in a good cross-docking scheme.
• Solution 2: Reverse Logistics
The considerable effect managing returns has on a company’s bottom line has generated a greater awareness of the importance of reverse logistics. But money is not the only reason companies should effectively manage their return supply chain. Your company is only as good as the relationships you establish with your clients, and managing customer returns is a significant contributor to customer satisfaction. So it is with great caution that companies must approach their reverse supply chain, and a good 3PL that is well-versed in managing this crucial part of business operations can help achieve the best results.
• Solution 3: Values-Driven Culture
A values-driven culture is another key aspect in creating a successful and sustainable business. Every workplace has a culture — if you don’t devise the right corporate culture, one will be created for you. Therefore, if you’re going to have a culture, it is up to management to make sure it’s the right one. A relationship with a 3PL that is experienced in making cultural improvements for increased profitability can help in several ways. The 3PL can train your leadership team on how to achieve sustainability even in a challenging economy, encourage responsibility through employee engagement and leadership development, and increase operational efficiency while lowering costs.
A 3PL can initiate solutions ranging from simple, effective changes to extensive cultural and operational overhauls to increase overall efficiency. Simple organizational techniques often are beneficial to companies facing a tough economy and shrinking profit margins. A recurring cause of warehousing inefficiency is the poor use of warehousing space, which causes companies to invest in more warehouse area than they actually need. Fortunately, a trained 3PL is able to recognize where complications arise and can fix them with effective and uncomplicated solutions at low relative cost and notable return on investment.
There are countless areas in which a 3PL can improve a supply-chain operation. Cross-docking, reverse logistics and culture are only a few of those areas. The concern of smart companies is how to optimize these areas through a customized solution that delivers the best supply chain and ROI results. Often, the ability to solve this problem is outside the expertise of the business owner or operator, and a partnership with a qualified 3PL is the best way to achieve the right system — and the right culture — for increased efficiency and business growth.
TMSi Logistics is a distribution, technology and integrated logistics provider with corporate headquarters in Portsmouth, N.H., and offices in Fernandina Beach, Fla., and Oak Brook, Ill.
