July 2006 | Commentary | Checking In

Going Above & Beyond: The Norm for Top 3PLs

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Whether a third-party logistics provider receives enough reader votes to win an Inbound Logistics Top 10 Excellence Award (page 100), or is chosen by the editors for the Top 100 3PL list (page 128), they share one common attribute—they go above and beyond the norm to meet, exceed, and in some cases anticipate their customers' supply chain needs.

In these challenging times, 3PLs help us adapt and cope with transportation and logistics issues outside our control. Take costs.

Last year, logistics costs rose more than they have in a long time, partly due to skyrocketing fuel prices and the scarcity of good labor. Costs also rise when businesses increase their complexity by implementing an inbound program, entering a new market, or launching a new product.

Extending the length of supply lines or destination markets for your products bumps transportation, compliance, and local management costs. Creating longer pipeline time for inventory does as well. 3PLs help shippers align supply to demand more efficiently as those points grow further apart.

In the macro sense, 3PLs have found many thousands—often millions—of dollars in productivity for shippers. Taken in the aggregate, this adds billions in productivity to the GDP. 3PLs find these dollars in direct savings—inventory reduction, new technology, lower transport costs.

But some savings come from what I call enablement efficiencies. How do you quantify, GDP-wise, how much a 3PL helps by opening a new business or product line? Or opening a new market for selling your products? Or finding and helping to create a new supply market that, over time, gives you a steady stream of higher quality or less expensive components or raw materials?

You and your 3PL partners are logistics explorers, pushing the boundaries of what is possible, moving beyond the current state of the discipline—advancing from simple contract warehousing or freight forwarding to a 24/7 global logistics network, for example.

I call it adaptive supply chain evolution. By confronting new demands and diverse needs, you prompt your logistics partners to provide new solutions for your ever-changing challenges. You evolve together.

That dynamic means 3PLs add new capabilities to their skill-set. When combined with the 3PL's existing experience, a critical mass often is achieved, creating new solutions that can be applied across the entire logistics market.

This supply chain or logistics cross-pollination means skill-sets and newly developed capabilities move from one 3PL customer to another, sparking another round of logistics evolution as those ideas are disseminated across many interlinking supply chains.

The bottom line: leading logistics partners help you tactically and strategically, managing your logistics and supply chain challenges in ways you expect, but also acting as business process change agents for your company and the global business community as a whole.

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