Warehouse Managers at 3pls

In the final stages of selecting a third party logistics provider for high volume programs, the director of logistics or operations manager will typically travel to conduct facility visits of 3pls that make the company's short list. This gives an opportunity to meet with the providers face to face, see how they run their day to day operations, and get better insight into each logistics company's strengths and weaknesses.

One of the best ways to get an indication of how a logistics company will perform can be found in their warehouse manager. Working with a solid, disciplined warehouse manager is essential to a successful third party logistics relationship. You want someone who has an entreprenurial spirit and is truly excited about your account. Talented warehouse managers are those who see each account as a challenge and seek every opportunity to create efficiencies for your program. They take pride in their work and are continually looking for ways to create cost savings and a competitive advantage for their customers.

If you visit a 3PL and the warehouse manager doesn't appear to really take an interest in your business or have strategic solutions on how to service your account it probably isn't the best place to bring your warehousing and distribution program.

The Lowest Logistics Costs

When receiving bids from multiple third party logistics providers for your company's warehousing and distribution program always beware of the company with the lowest bid.

There that RFP response is sitting on your desk from XYZ logistics. Its got to be bugging you. 3 dollars a pallet less than anyone else that bid on the program? On first thought you'd think that is clearly the best deal, but chances are that outsourcing your program to the company with the lowest bid could have the potential to be a problematic business relationship.

3PL's sell time, talent, and space. To get a 110% effort out of your logistics company you need to enter into a truly mutually beneficial partnership. You are looking for them to create efficiencies in your supply chain and generate cost saving opportunities, they are looking for solid relationships with companies that are looking to grow their business that will in turn make them successful.

The lowest bid can sometimes be a result of the company improperly pricing your program based on the inventory characteristics and volumes you provide. This can cause substantial problems with the 3PL/Customer relationship.

Also alot of times you will find that third party logistics companies will take on clients just to cover large amounts of empty space at a loss. This can sometimes work out in your favor and sometimes also in theirs if they are in a particular stage with their business. But many times this can be a problematic situation because you can usually guarantee that if they are operating your account at a loss you are probably not going to get the best service and some may even terminate the relationship once they find a profitable customer to take your place. Now by no means am I saying this always happens but it is something you should be aware of.

As I said before the most successful 3PL relationships are mutially beneficial. Be sure to keep that in mind when selecting a provider. A high quality logistics provider is typically going to have excellent service, more enhanced technology offerings, and some of the best talent in the industry. In additional to the big players in the logistics industry, there are also alot of mid-market 3PLs that provide great value for companies of all sizes and budgets. When reviewing bids on your distribution program be sure to use diligence researching companies. You definitely can afford the 3PL with the lowest rates, but can you afford the headaches if it turns out you selected the wrong provider?

Flexible Warehousing & Logistics Solutions

The big buzzword sometimes used by marketing folks in the logistics industry is "flexible warehousing." For those of you who are new to third party logistics or are still in the discovery phase of outsourcing part or all of the management of your company's supply chain I thought I would provide a description of the phase and how it can help you.

Flexible Warehousing
Many warehousing companies tend to use "flexible warehousing" as a way to describe their main benefit to potential customers.

If I were to pick one of the biggest advantages of outsourcing to a third party logistics provider I definitely would say its the flexibility they provide.

By flexibility they mean the ability to alter your logistics program to fit your current needs at any moment. By the business quarter, by the month, by season etc..

One disadvantage to companies who run their own distribution centers or network is they don't always have this kind of flexibility. If your product has a very heavy seasonal inventory build followed by months of very low inventory levels then usually flexible space is going to be the best solution.

Using a 3PL offers flexibility in:

• labor
• storage
• handling
• equipment
• location

By using a flexible "variable cost" solution companies can ramp up inventory during their busy seasons and then bring inventory levels significantly down, or opt to completely cease storage of inventory with a provider for a period and then start building inventory again in peak season.

Another term that is also sometimes used is "scalability."

Third Party Logistics: Outsource or In-House

For many logistics directors the question that arises throughout your career is do you keep your logistics program in-house or do you outsource to a third party provider?

If your company already has the equipment, facilities, and talent at your disposal than keeping most of your company's logistics in-house is probably the most effective route to go. But if you are a company that doesn't have a strong competency in logistics, or your company really doesn't make logistics and supply chain management a priority and it is starting to show, then it may be time to investigate whether or not it makes sense to use a 3PL.

Logistics is the process of moving goods from a manufacturer to a customer in the most timely and cost-efficient manner possible.

Are you regularly getting your products to customers on time?

Are orders being properly picked for shipment on a consistent basis?

Do you have the processes in place to support supply chain efficiency?

Do you have access to inventory management technologies that enable you to have visibility of your supply chain?

Are you shipping product in high enough volumes to have strong purchasing power in the market?

These are some of the questions you have to ask yourself before coming to a decision.

Tags: Third Party Logistics, 3PL, Logistics, Warehousing