July 2016 | Commentary | 3PL Line

How to Stand Out From the Crowd

Tags: 3PL, Supply Chain Management, Manufacturing, Logistics, Third-Party Logistics, Supply Chain

The changing needs of today's manufacturers, coupled with the intense challenges third-party logistics (3PL) providers face—from greater reliance on just-in-time inventory and the increasing role of technology, to port congestion and the truck driver shortage—have led to a landscape ripe with competition. Arguably more diversified and sophisticated than ever, the 3PL sector is seeing an emergence of more 4PL partnerships, resulting in deeper, more strategic relationships.

An increase in daily transactions places more requirements on the supply chain. Collaboration has led to supply chain consolidation, resulting in more agility, visibility, and flexibility throughout a product's lifecycle. 3PLs need to work with other supply chain partners and vendors to provide real-time data, forecasts, and key performance indicators to react promptly to issues.

When selecting supply chain partners, technology has become as important as cost to meet the need for additional transactional volume at greater speed. As a result, 3PLs must continually invest in their technology infrastructure to ensure they don't lag behind.

E-commerce comprises 15 percent of all retail sales, driving smaller order quantities and more logistics around final-mile delivery. And as shippers and manufacturers move toward just-in-time inventory, they eliminate builds and holds.

Finally, warehouse space in dense markets is tight, driven by big box retailer growth—especially in port-centric areas such as New York/New Jersey and Los Angeles/Long Beach.

As manufacturers increasingly rely on their logistics providers to help improve sales, 3PLs must streamline their organizations to ensure customer supply chains operate efficiently and seamlessly.

Wanted: An All-in-One Partner

Today's manufacturers need a 3PL to provide all the necessary business, operational, and IT resources effectively and cost efficiently. To stand out in the marketplace, logistics companies should clearly communicate their value proposition as not just another warehouse, but as a strategic partner and critical component of the supply chain.

3PLs must work to drive more 4PL partnerships, and serve as an integrated end-to-end solution. This is especially important because manufacturer demands for 3PL services in the United States extend beyond a single distribution point, and require a partner that can serve as a one-stop shop. 3PLs that can consolidate all operational and customer service functions through a united platform can also handle larger manufacturers with complex supply chains.

Visibility is a key factor in supply chain optimization as manufacturers want and need a clear window into the process, with the ability to track containers and shipments in real time. Because of this, 3PLs must take an innovative view of technology that includes having the right infrastructure in place today, with a strategic eye toward the future.

It's also important that customer service is a priority because it can serve as a key differentiator. 3PLs can commit to customer service excellence by creating and cultivating a skilled and helpful team that is always at the ready.

Accountability is also paramount as products move through the supply chain, touching different vendors and processes at various points. 3PLs should have in place a strong system for vendor and supply chain partner accountability.

Finally, it's important to create a flexible infrastructure. 3PLs that can easily adapt to manufacturers' evolving needs will solidify their positions in the marketplace and be poised to grow.