July 2013 | Commentary | Checking In

Business Process Improvement? Flexibility.

Tags: 3PL, Supply Chain Management

Keith Biondo is the publisher of Inbound Logistics magazine.

In his futile search for the Fountain of Youth, Ponce de León walked right past untold riches. If you are not evaluating your third-party logistics providers for their ability to drive strategic improvements in your enterprise, you may be doing the same thing.

Thirty-three percent of respondents to our annual 3PL Perspectives market research survey say they strongly rely on logistics partners to drive business process improvement. That's a sizeable number of companies recognizing that a 3PL can help cut total logistics costs, including transport spend, as well as improve the enterprise's overall business processes.

Business process improvement requires that your logistics partners be flexible enough to look beyond logistics and supply chain operations, and understand the inner workings of your company's entire operational processes. They can also field most of the curveballs—and crises—your logistics network can toss at them, yet still provide great customer service to you and to your customers. And when a 3PL also has a high strategic flexibility quotient, it can propose the improvements—and provide the solutions—to enable change that goes beyond your logistics operations.

Merrill Douglas' article Supply Chain Remodeling highlights how flexibility drove business process improvement that enabled companies to grow in ways they couldn't grow before.

For example, Flash Global Logistics helped reshape pharmacy automation systems company Talyst's distribution network. As a result, Talyst is now more flexible; it can scale services up or down as needed, and trimmed 10 to 15 percent of overall operating costs.

Choice Logistics helped IT hardware company CentricsIT retool its technical support business through an enhanced and flexible inventory management process. The business process improvement launched an entirely new distribution network. To further expand CentricsIT's business process improvement, flexible solutions provided by Choice Logistics are helping to drive global market expansion.

When dramatic growth caused beverage company TalkingRain to outgrow its distribution network, it turned to Saddle Creek Logistics Services. The 3PL now handles all distribution, and value-added services inside the warehouse. TalkingRain has cut costs, gained overall business efficiencies, and is able to provide better service to its customers.

All these business process improvements were driven by the flexibility of 3PLs. Here are four characteristics of 3PL strategic flexibility:

1. Does the 3PL have the knowledge and broad range of experience to look beyond your logistics operation and help drive real change in your entire business process?

2. Is the 3PL financially stable? If margins are thin, the provider will have few resources left to drive investment and innovation.

3. Is the 3PL focused on offering you enterprise solutions? Or is the provider just managing its network and resources to keep its own business efficient and costs low?

4. Is the 3PL aggressive? Not the macho gambler type that promises anything to get your business, then walks away and asks, 'Now how the heck are we going to do that?' I mean a logistics partner that is hungry for growth, and is not risk-averse to getting there by taking chances and investing today's profits for your gain—and its own future profits.

Companies sometimes overlook flexibility when they evaluate 3PL partners. But they shouldn't. Having flexible partners becomes increasingly important as all the low-hanging supply chain fruit has been picked, and greater efficiency lies on the complex road to business process improvement.

You may never find a supply chain fountain of youth, but you can get richer on your journey. A flexible 3PL partner can take you there.