Defining Roles In The 3PL Industry: Business Needs And Service Providers

In its annual report, noted supply chain management and consulting firm, Armstrong & Associates revealed that 90 percent of domestic Fortune 500 companies used third-party logistics (3PL) providers for logistics and supply chain functions.

With heavy demand for 3PL global logistics services, a variety of companies jumped into the supply-chain-management pool. Many of these companies add value to well-defined areas of logistics. However, few deliver integrated solutions.

This is not a problem for large companies with sophisticated transportation and logistics departments. They have built integrated supply chains and can assess areas that would benefit from outside resources.

For mid-size companies, the variety of entities delivering 3PL and global logistics management services can be overwhelming. Focused on their core competency – and not on supply chain management – these companies may miss opportunities to find greater efficiencies and bottom-line savings in their supply chains.

Where to begin? In evaluating the 3PL and global logistics management options available, consider what each does best and whether it will deliver the benefits your company is looking for.

Shipment Management

Your in-house logistics group knows your business the best. They have experience working with your distribution network and people. They understand your products and your customers. They know the industry and what works.

By utilizing global shipment management support activities from a 3PL, you can add logistics resources and expertise when and where they are needed. The service provider becomes an extension of the in-house operation, working alongside each other to deliver:

• Bottom-line cost savings from expenses associated with acquiring and maintaining equipment, staffing and transportation pricing.
• Operational efficiencies from the logistics provider’s proven processes.
• Greater flexibility and faster responsiveness from ongoing technology investments, improving supply chain visibility.
• High level of expertise in supply chain management and awareness of the changes taking place in the industry.
• Accountability for results achieved against predetermined key performance indicators.
• Continuous improvement as the business relationship evolves.
• Customer support including shipment planning, inbound supplier management and trade compliance, exception management, and issue resolution.
• Account Management to track and monitor key performance indicators through with business reviews and dashboards.

Technology

State-of-the-art technology is at the heart of today’s nimble supply chains. New technologies provide shipment visibility from the point of origin to the customer’s dock. This visibility enhances the company’s control over when and where product is delivered and provides the information to improve decision making.

The question is not whether new technologies will improve supply chain effectiveness; they will. The questions are which technologies are best suited for different business needs and how does a company gain access to them.

There are many technology vendors offering proprietary software to support supply chains. Selecting the correct technology and vendor is only the beginning. Once the hardware and software is purchased and installed, will the vendor be there to support reconfiguration requirements, upgrades and ongoing integration issues?

By comparison, contracting with a 3PL that invests in logistics management technologies gives its customers access to best-in-breed technologies and economies of scale.

• Technologies, applications and development expenses leveraged across all 3PL customers, frequently delivering cost savings to each company.
• Unlike a 3PL that offers a homegrown solution, here technology keeps pace with the company’s needs and marketplace changes.
• Data exchange managed by the 3PL delivers better integration among the company, its systems, carriers and vendors.
• Support staff available to resolve issues for the duration of the contract.
• System configuration changes aligned with the company’s business needs.
• Training provided for the company’s personnel.
• Comprehensive disaster recovery planned for in advance and problems averted through regular testing and ongoing improvements.
• Technology upgrades handled by the 3PL, including functionality assessments, regression testing, training, and post-implementation monitoring.
• Continuous improvements flows from extended interactions between the 3PL and its customers.
• From shipment tracking to total landed cost, the 3PL takes the data collected through the technology to create business intelligence for the customer to support day to day operations, compliance, forecasting, and budget planning.

Carrier Management

Trucks, rails, pipelines, ships and air carriers all are part of the movement of goods. On a global scale, more than one mode of transportation nearly always is utilized before the freight reaches its final destination. Selecting appropriate carriers to match distribution patterns, timelines and budget restrictions is challenging.

In addition, while carriers typically offer technology tools, they usually are limited to online quotes, forms, shipment tracking and tracing, shipment delivery receipts, and historical reporting. While this is valuable information, it is narrowly focused on the moves the carrier manages and may not reflect the company’s entire transportation picture.

A 3PL brings all elements of the transportation process together for easier management and cost savings.

• Contracted rate savings achieved through the 3PL’s volume purchasing for multiple customers.
• Historical perspective on carrier performance minimizes the likelihood of late deliveries or damage.
• An ally to aid in carrier management, including carrier vetting, claims administration, and contract administration; safety ratings, insurance verification, and performance monitoring all summarized with carrier scorecards.
• Single resource to track shipments, regardless of carrier or mode.
• Freight Management Technologies facilitate shipment planning, optimization, and execution across multiple modes.
• Dedicated support personnel perform logistics functions as needed based on the 3PL customer’s business rules.

Summary

Third-party logistics providers allow their customers to stay focused on their core competencies. Delivering breadth and depth in supply chain management experience, 3PLs can create integrated supply chains for companies that enhance customer service and uncover cost savings.

Third-party logistics providers also ensure their customers’ supply chains remain effective throughout the ups and downs in business, whether cyclical or unplanned. This ability to scale solutions to conditions keeps companies competitive and customer-centric. When demand spikes, the company can rapidly scale up transportation and labor to handle the business. Conversely, a business downturn can be addressed quickly.

With the aid of a 3PL, the company can centralize its logistics planning and avoid the costs associated with maintaining multiple teams in diverse locations. Using a centralized approach, companies can evaluate their entire supply chain for economies of scale and opportunities to consolidate freight. The results typically include reduced logistics costs.

Need more information?

To learn how Noatum Logistics can create intelligent global solutions for your business, contact us at:
1-866-972-9272 or contact_us@miq.com.

Noatum Logistics is a global logistics company headquartered in Overland Park, Kan., and with offices in North America, Asia, Europe and Latin America. Noatum Logistics enables companies to improve their logistics network and overall supply chain efficiency by offering flexible logistics solutions supported by Web-native technology and global logistics management capabilities.