The Recession was a reality check for all companies as it was clear that ‘No company is too big to fail’. However, the post-recession phase was highlighted with companies trying to make their supply chain as lean and effective as possible. As companies look into alternatives to keep their operational costs in check the priority remains the same, formulating smarter ways to manage the flow of their final goods to their customers all around the world.
Challenges Faced and a Way Out
Maintaining multiple warehouses and efficient in-house logistics has become a financial burden on these companies. Rising fuel prices and tightening of compliance requirements and customs regulations have made matters worse. Hence, the post-recession phase saw a lot of companies downsizing their logistics division and outsourcing their logistics requirements to other Third Party Logistics (3PL).
How does 3PL Drive Value?
3PLs are respective experts in the field of delivering supply chain solutions. However, in order to get the best out of them it is very important for companies not to treat them as an ordinary transportation service provider, but align them as their core business partners. 3PLs are actively trying to come up with new strategies and resourceful ways to improve productivity, cost effectiveness and keep the transit time as short as possible. In such a set-up, we have a situation in which the manufacturing company as well as the 3PL are operating on the lines of Comparative Advantage available, meaning each one is doing the set of jobs they specialise in, and as a result the overall supply chain of the manufacturing company becomes strong and effective.
How do companies benefit from the services of a 3PL?
The 3PLs usually cater to the needs of a wide variety of clients and hence they can operate at costs which cannot be matched by a manufacturing company’s in-house logistics team. Their management of the entire process map is remarkable because their business thrives on customer satisfaction as well as future prospect of business. Hence they are motivated to put the right people at the right place to ensure that they don’t miss any delivery deadlines. This dedication is critical to a company as it helps them provide better service to their client base all over the world.
- Abhishek Chowdhury, Supply Chain Associate Consultant, Bristlecone
