3PL Capability is Key to Logistics Cost Reduction
Logistics, inventory and transportation costs continue to climb, according to the 2011 State of Logistics report released by the Council of Supply Chain Management Professionals (CSCMP). Although overall economic conditions improved slightly in 2010, internal supply chains continue to account for double-digit cost increases.
Materials, labor and fuel are contributing factors, but the impact of rising overseas production costs, continuing product proliferation and more stringent regulatory requirements cannot be overstated. In many cases, companies are finding that additional investment is required to remain competitive. However, building an extensive in-house logistics infrastructure only adds to existing pressure on the bottom line.
Investing in outside services is more cost effective than pouring money into areas that are not core competencies. Capable third-party logistics (3PL) providers can help you manage rising logistics costs because they already have highly developed processes and critical infrastructures in place.
Companies must remain vigilant in their search for a capable 3PL. Now is not the time to risk parts shortages, substandard product quality or delivery errors. Fortunately, there are several clues that point the way toward a 3PL provider that can reduce your costs while still exceeding your most demanding quality, service and delivery goals.
Flexible, Custom Approach
A provider truly concerned with reducing your costs will have a custom, diagnostic approach. It won’t try to force you into an existing network or insist on pre-packaged solutions to maximize its own returns.
At Comprehensive Logistics Inc. (CLI), our Transportation Management business unit focuses exclusively on freight-cost reduction. Our custom program development begins with an analysis of your existing state and a “clean slate” of ideas for improvement. Although execution is tactical and supported by web-based technology, our programs are aimed at delivering strategic cost reduction.
CLI’s supply chain management and warehousing services are just as flexible. Since we are a non-asset-based provider, our programs aren’t influenced by the need to utilize leveraged capacity. Our agile real estate and implementation capabilities allow us to launch any size operation in any region throughout North America.
As an example, we’ve been able to deploy extensive manufacturing support centers, complete with wireless technology infrastructures, over a single weekend. Our custom approach enables us to be responsive to the needs of any client.
Commitment to Process Improvement
Another way to ensure your 3PL provider will deliver on its cost-reduction promises is to verify its dedication to continuous process improvement. A 3PL with process expertise offers standardized processes that have been refined over years of engineering best practices through a formal Continuous Improvement program.
This ensures waste and the potential for error are permanently driven out of core processes. It supports the development of efficient, scalable service models and allows processes to be modified quickly to respond to changing business needs.
At CLI, a disciplined Continuous Improvement methodology drives everything we do. Our core processes have evolved in the most challenging, just-in-time logistics environments. All change is managed by a centralized, multidisciplinary team that consults our database of proven processes, evaluates the impact of each change and engineers the appropriate response. We continually test, measure and improve our processes using the fundamentals of quality management. This means both new and existing clients receive only the leanest and most capable processes that will improve their logistics performance and support the bottom line.
Finally, a capable 3PL will be completely transparent about its internal processes, costs and overall capabilities. It will embrace open-book pricing and offer end-to-end, real-time supply chain visibility.
At CLI, we use sophisticated, web-based technology to collect and report item-level data at every process step. Clients simply log in using any web-connected device, such as a desktop computer, tablet PC or smartphone, to access every detail about their in-transit inventory, work in process and shipment status 24 hours a day. This represents the ultimate in transparency—the ability to see through the supply chain.
Because all transactions are transparent, clients maintain control while still benefitting from our process expertise, technology and detailed performance reporting. Even better, since our technology is owned, developed and hosted in house, it is completely configurable to each client’s specific needs.
So, as your quest for cost reduction continues, remember: You can design the best product in the world, but if logistics processes fall short, you can’t bring your quality product to market.
To learn more about how CLI can help you reduce logistics costs and gain full visibility into outsourced processes, visit www.complog.com.