It shouldn’t come as a surprise that most business enterprises are relying on third-party logistics providers to manage the supply chain activities on behalf of the enterprise. This outsourcing has resulted in a reduction of costs, a decrease in delivery time, an increase in efficiency, and an increase in sales and profits.
As customers’ demands increased for quality products and services so did the pressure on the enterprises to match up to the standards and on the 3pl companies to deliver their best under all circumstances.
Does the responsibility of managing and optimizing the supply chain lie solely with the logistics provider? Is there anything the enterprise can do to ensure that it gets more from the deal by strategically working with the logistics provider?
The answer to the first question is, no. As much as the 3pl provider takes responsibility for the job if the enterprise wants something extra, it will have to put in the effort to communicate and coordinate with the service providers to ensure they both understand the terms.
The answer to the second question is, yes. The performance of the enterprise and the logistics provider can be improved when both parties work in tandem towards a common goal. Whether it is to get 3pl warehouse services like never before or to have the fastest delivery times, here are some ways in which an enterprise can maximize the benefits it gets from logistics providers.
Optimizing resources don’t mean that the enterprise doesn’t invest in developing the relationship with the service provider. Having someone with authority and knowledge take-up the responsibility of communicating and collaborating with the 3pl company is a good way to allocate resources to improve the performance of the logistics provider.
One thing enterprises tend to do is to keep things a secret. While confidentiality is essential to survive in this cut-throat world, keeping the 3pl provider in the dark will cause more harm than good. Tell the service provider what the business aims to achieve by so and so year. Share the long term goals and plans with the company and ask for their support to achieve the goals. The success of the enterprise lies quite a lot on how well the logistics company can assist with the process, and this is possible only when the company knows that the enterprise is planning and has planned for the future.
Regular Communication- Reports and Reviews
Using third-party logistics services don’t mean that the enterprise will hand over the job and forget it. While there’s nothing wrong with that, if the enterprise wants more, it has to do more. Keeping the communication channel open is crucial. When the 3pl company sends periodic reports, the enterprise should study them and talk to the company to see if there are ways they can improve the performance. Organize periodic review meetings to discuss the changing scenario in the market and how the enterprise and the company can stay ahead in the race. Have a schedule set up for these meetings in advance. Decide on a mutually agreed period and stick to it.
Factor KPIs- Identify and Measure
KPIs show the plus and minus points of the enterprise and the service provider. Focus on the key performance indicators related to logistics and supply chain and talk about them with the service provider. While some enterprises are already doing it, not all of them are seeing a difference in performance. The main reason for this is choosing the wrong KPIs to focus on. KPIs will not be the same for every business. They change based on the industry, long term goals, and the resources available.
Collaborations are Essential at Various Levels
The success of 3pl providers lies in the execution of the job. Picking, warehousing, packaging, transporting, shipping, and delivering at the right time will result in smooth and cost-effective services. This has to be done not once but every single time. The logistics provider should constantly strive to do better than before. And for this, they need to collaborate with the enterprise at multiple levels.
For the enterprise to get 3pl warehouse services as per its needs, the business should first provide the company with the details of the products (not just the number of packages and storage time but also the type and nature of the products). Sending updates to the logistics provider about the products, giving the company all the required information and also the freedom to be innovative, etc. will help in establishing a good relationship between the parties.
However, enterprises should choose a reliable and capable logistics provider if it wants more than the best from the company. Meeting the top 3pl companies before finalizing on one service provider would be a good idea.