3PLs & Shippers: In It For the Long Haul
Shippers seek 3PLs to provide transportation, distribution, fulfillment, and warehousing solutions. The right 3PL partner, however, offers continuous improvement in ways that some shippers couldn't hope to expect.
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Shippers choose third-party logistics (3PL) providers for myriad reasons. 3PLs provide infrastructure and up-to-date technology solutions that shippers may not have or be able to afford to invest in. They provide consistent, reliable service that shippers can pass on to customers. They stay updated with the latest regulations and best practices. They can scale up and down as needed, and help meet sustainability objectives. The list goes on.
Perhaps the best reason companies choose to outsource some or all of their logistics operations, however, is because 3PLs provide lasting benefits that grow throughout the course of the relationship. The long-term effects 3PLs provide enable shippers to improve the bottom line and capitalize on new efficiencies long beyond the date the contract gets signed.
When security is your business, it can be difficult to trust. When Entrust Datacard—a provider of security solutions—needed a partner to optimize its distribution and transportation operations, it paired up with Crane Worldwide Logistics, a global 3PL with distribution capabilities in all the right locations.
"All of Entrust Datacard's customer orders in Asia Pacific and Brazil were filled from our Minneapolis location by air freight, resulting in deliveries as long as 10 days with expensive trans-Pacific airfreight rates for customers," says Marc Schopp, vice president of global logistics for Entrust Datacard.
Crane now manages fulfillment centers on behalf of Entrust Datacard in the South Pacific, Asia Pacific, and Brazil, while also managing inbound and outbound freight between the company, vendors, and customers.
Manage more, manage faster
"It comes down to speed, and our ability to manage more and to manage it faster," says Pete Mento, vice president of global trade and managed services for Crane Worldwide Logistics. With the 3PL on board, the security firm noticed immediate improvement. "Working with Crane to optimize the inventory levels in-region allowed us to reduce our order delivery time to one to three days, which allows our customers to manage their order sizes, thereby increasing their cash flow and optimizing inventory levels," Schopp says.
"Orders previously lost to local competitors were obtained with such a quick delivery time," he adds. "Customers often pay a much lower freight cost now that the deliveries are local. This total cost of ownership reduction, along with decreased delivery times, allows Entrust Datacard's logistics division to be part of our value proposition to our customers.
"It's always great for a logistics group to be told they are helping our sales teams make sales rather than hindering them," Schopp says.
By letting Crane handle day-to-day transportation challenges, Entrust Datacard's internal logistics operation can focus on big-picture issues such as customer satisfaction, manufacturing, and expansion, while ensuring regional representatives still have the data they need to drive sales.
"Our teams see inventory availability in real time and place hot orders that can be fulfilled immediately without waiting for the U.S. team to wake up," Schopp says. "These orders ship locally, same day, more than 99 percent of the time. This has had an incredible impact on our ability to help customers in urgent situations and keep their equipment running."
a true partnership
The continuous improvement the relationship drives is fueled by an understanding of what partnership truly means. The free flow of information between the two is crucial to interminable success.
"We push improvement by gathering the data Entrust Datacard needs to properly manage its providers," says Mento. "Transportation companies often get graded by the stats they bring into the conversation themselves. That seems backward—with better data you can measure the issue, come up with ideas for improvement, then judge if the ideas are working."
True partners don't just phone it in, but find ways to improve the projects they take on by cutting costs and meeting challenges in new ways. "Crane places value on continuous improvement and works with our global team on both big and small network optimization opportunities," Schopp says. "That continues to reduce our supply chain costs.
"We expect to partner with Crane and look at areas that can be optimized either for cost, cutting order fulfillment time, or reducing inventory—all with the goal to better please our customers and grow business."
Home is Where the Décor Is
With thousands of direct sales representatives depending on products to arrive undamaged and on time, home décor company Signature Homestyles needs an expert capable of managing transportation between suppliers in China and its facility in Illinois. Fortunately, A.N. Deringer was up to the challenge.
"Deringer's Atlanta customer service center manages the international freight forwarding, customs brokerage, importer security filings, and final delivery for Signature HomeStyles," says Lori Smith, branch manager for A.N. Deringer's Atlanta facility. "Value-added services include account management, daily container tracking reports, and communication regarding shipments."
By using the 3PL, the multi-level marketing firm turned a complicated international shipping process into a simple point-and-click function.
"Transportation management is complex and our shipments originate in China," says Lisa Farooqui, purchasing manager at Signature Homestyles. "Deringer oversees and simplifies the inbound freight for us from end-to-end.
"We start with booking the cargo space and end with the delivery order," she adds. "Deringer manages freight transportation from the port in China to Chicago, and coordinates with our trucker for delivery to our dock. It takes care of customs clearance and maintains the necessary compliance.
"We also rely heavily on its daily status report to provide all updates necessary to track the shipment until it delivers to our dock," she says. "We have full visibility of shipments from start to finish."
While Signature Homestyles has used A.N. Deringer for many years, it still realizes improvements. "We don't have to deal directly with carriers; Deringer is the go-to for any freight-related issues," Farooqui says. "The process, paperwork, and regulations involved in international trade are always changing, and Deringer helps things run smoothly.
"And we don't have to chase them for updates—we get a daily report that answers questions that arise," she adds.
Behind the scenes, Deringer handles complications and fluctuations without involving the shipper, which improves efficiency and reduces costs.
"We continuously monitor the ocean container market, ensuring Signature HomeStyles benefits from the best rates and transit times," Smith says. "We keep them informed of upcoming changes in the trade network, along with customs and government compliance alerts that may affect imports. As their needs change over time, we update the reports with details they require to proactively ensure the timely release of freight."
Many shippers rely heavily on 3PLs to efficiently move their freight without the need to heavily invest in infrastructure, software, or assets. In the end, 3PLs operate as the silent heroes of the supply chain on behalf of their partners. Regulations change, rates fluctuate, new technologies offer better ways to meet challenges—and, by their very nature, third-party logistics providers are on top of it all.