Third Party Logistics Article

I recently came across another great article on third party logistics in Materials Handling World magazine.

It gives a window into the rapid growth and global expansion that companies providing outsourced 3PL services are beginning to see.

Its no mystery that logistics and fulfillment services are rapidly becoming the most sought after outsourcing opportunities available in business. Outsourcing logistics to a high quality 3pl provider is a proven way to create a competitive advantage in the marketplace.

And as the article mentions, even in periods of slow economic growth like we are seeing in the United States, use of third party logistics services increases as companies turn to 3PL's to lower logistics costs and create effieciences.

Third Party Logistics Metrics

Measurement. While some will argue that it is a waste of time or unrealistic given the enormous amount of responsibilities given to employees; Its hard not go out there and find that the best of corporations are rigorously measuring their logistics metrics. Some of these measurements can be conducted with help from your third party logistics provider, but in order to get a full picture of your supply chain it is important to take a look at your whole operation.

Here is a list of common logistics metrics.

• Fill Rates
• Inventory Turns
• Cycle Times
• On Time Delivery
• DPMO
• Order Fulfillment by order or line item
• Order Fulfillment lead time
• Total supply chain management costs
• Order Management Costs
• Productivity per employee
  
• Forecast Accuracy
• Expenses (SG&A) as % of Revenue
  

Anyone Can Provide 3PL Services?

I recently came across a great post from Michael Stolarczyk @ Exel on maintaining a solid third party logistics relationship. It suggests that anyone in the supply chain management field can rent a warehouse, buy trucks, a few forklifts and the latest logistics systems and provide their own logistics services, but to take those tools and deliver an effective service is the real challenge. Even with the latest and greatest technologies and tools to provide excellent service; time and again companies end up with failed implementations and a dysfunctional supply chain.

When selecting a logistics provider it is very important to have a real understanding of your supply chain and what you are looking for from a 3PL before going through the process. Great communication, planning, and operations management are essential to successful third party logistics.

Here are a few other related posts on the topic.

Maintaining a 3PL Relationship
Selecting a Logistics Provider

Starting the New Year with your 3PL

A New Year is upon us, and what better time to re-evaluate your relationship with your third-party logistics provider. How successful was your distribution program for 2005? Did you achieve everything you had hoped to accomplish. Have they maintained a respectable on-time delivery rate, relentlessly worked to find ways to create logistical efficiencies and provide continuous improvement? Are your logistics goals being met and metrics being effectively tracked?

Heres to 2006 and another successful year working with companies that provide high quality outsourced 3rd party logistics services.