11 Ways 3PLs are Helping Retailers and Manufacturers Today3PLs Help Improve Profitability of Retailers & Manufacturers
During 2016, logistics and freight operations professionals enabled U.S. businesses to reduce costs for the first time since 2009. This is an impressive result, especially given the explosive demand fueled by the e-commerce sector and the overcapacity, slack demand and rate strain faced by traditional transportation modes.
Today, 3PLs have taken on a much wider role in the supply chain industry, that of collaborative partner. Acting as an extension of their clients’ businesses, 3PLs bring considerable expertise to reduce supply chain/logistics costs and to provide a broad array of value added services from enhanced customer service, inspections, refurbishments and recycling of returned goods to kitting and assembly.
These added services enable their clients to operate leaner so that they can better focus on their core mission and expertise rather than on transactional activities in which 3PLs already have specialized expertise.
Expanding the 3PL-Client Relationship with Value Added Services
Value added services now run the gamut. To help customers increase shipping efficiency, some 3PLs now offer packaging design services. This can help reduce carbon footprint, aid with warranty management issues and enhance the efficiency of shipping. Other services relate to the specialized expertise of the 3PL. Clients of 3PLs often value their global expertise to aid with customs regulatory issues and international documentation as well as duty optimization and freight forwarding.
Because of the breakneck pace at which today’s retailers and supply chain runs to service consumers, retailers and manufacturers need all the help they can get to save money and get goods on the shelves and into consumers’ hands.
Never before in the history of the world have consumers been more impatient. Today’s consumers arrive at brick and mortar stores armed with volumes of information they have collected by using Smartphones, tablets, computers and other devices connected to the Internet. By the time they get to the store, they have typically read peer reviews.
Consumers with ethical concerns often have researched business practices of manufacturers, retailers and others in the supply chain so that they can consider these matters when making buying decisions. Consumers know the competitive prices of goods, product availability and shipping costs and are ready to conduct business.
These multiple methods that consumers use to research, shop for and connect with brands is known as omnichannel retailing. The consistency of the consumers’ brand experience across the various platforms and brick and mortar store is critical. Typically consumers relate their brand experience to how long it takes to get the goods into their hands. Related to this are supply chain and logistics processes and concerns. Not all infrastructures are ready for omnichannel retailing. Is yours?
Enter 3PLs. Today 3PLs play a vital role in omnichannel retail fulfillment, acting as valuable partners to manufacturers, suppliers and retailers to help ensure a seamless brand experience for consumers. Masters of warehouse operations, distribution and inventory management, typically 3PLs have the knowledge, experience and connections to help companies get the goods they produce and sell into the hands of consumers faster, more accurately and affordably than when using internally managed operations.
3PLs often act as the face of the retailer, providing customer service support, processing returns and conducting other activities on behalf of retailers, both e-commerce and brick and mortar. These consumer-facing services need to be seamless representations of the brand experience. 3PLs can be ideal partners when dealing with omnichannel retail concerns. They can establish a common inventory system across all the various channels and use a common system to determine which channel from which inventory will be pulled, based on necessary parameters such as delivery methods and zip code.
Here are a Few of the Ways in Which 3PLs Help Retailers and Manufacturers
1. 3PLs provide their clients with much needed flexibility. By strategically outsourcing some additional operations to 3PLs, retailers and manufacturers put themselves in a better position to respond more dynamically to customer demands. Using one warehouse management system for all its clients enables a 3PL to increase its flexibility to re-allocate labor on its clients’ behalf. This helps handle seasonality and spikes in order volume.
2. 3PLs can provide access to vital IT infrastructure and systems. Outsourcing to a 3PL can enable your company to take advantage of its warehouse management system, transportation management software, collaborative tools and freight management expertise as well as of any material handling and other technology solutions without a capital investment. Unlocking doors to vital current technology and a skilled IT workforce can pay valuable dividends and enable you to have the real time visibility and data you need to make better decisions faster.
3. 3PLs can help scale operations, upward or downward to meet seasonal demand or the aggressive growth spurt of a business. Outsourcing to a 3PL enables its clients to have more control over their business without the delays and hassle of hiring and training workers. This is especially important for seasonal businesses as well as for companies that are growing in specific geographic areas. Outsourcing also reduces the outlay of capital for facilities, software such as warehouse management systems, telephone and Internet, etc.
4. 3PLs help expedite new products and get goods to market faster. Using 3D printers, some 3PLs are printing parts and prototypes for their customers to test. With the consumer appetite for fast delivery and immediate order of new products, being able to test market prototypes and get goods to market faster provides a distinct advantage.
Whether it is a new product launch, introduction of a “new and improved” product or simply standards orders of goods to fill retailers’ shelves, some 3PLs have mastered ways of simplifying receipt to get goods to the shelf faster. For example, having a 3PL handle the ticketing and bagging of goods, relocation of goods from bags to hangers and other similar processes can expedite goods to shelves at a lower cost.
5. 3PLs can handle direct shipping to consumers. Many brick and mortar retailers and manufacturers choose to outsource direct shipping to 3PLs rather than using separate fulfillment facilities or bring small order pick/pack and ship into their distribution centers.
6. 3PLs can handle reverse logistics and returns processing. In dealing with goods that have a high rate of returns such as apparel and electronics, using a 3PL can have distinct advantages and eliminate unnecessary headaches. Some of the activities associated with returns processing are cost competitive and can include inspection and testing, refurbishment, etc.
7. 3PLs can help reduce shipping costs and time to customers. Selecting a 3PL to process inbound receipts at port, receive goods and break down bulk goods for shipment to stores can result in time, labor and shipment savings. Outsourcing activities to a 3PL with multiple locations can help reduce time to customers and provide distribution across a specific geographic area or even across the country. Using a multi-DC strategy is often key to reducing shipping costs and time.
8. 3PLs can enable their clients to focus on the core competencies of their operation. 3PL clients such as manufacturers and retailers do not tend to be experts in warehouse and logistics operations. By outsourcing some of these activities to a 3PL, clients are better able to concentrate on their internal strengths and to maximize the effectiveness of their respective operations.
9. 3PLs can enable their clients to test new disruptive technologies. Use of robotics, voice picking and enabled technologies, 3D printing, augmented reality and other new technologies sometimes being tested and used by 3PLs can give their clients real world results in using these advances without having to lay out capital or spend money on consultants and equipment. Some 3PLs are experienced in using new technologies strategically and purposefully for the benefit of their clients.
10. 3PLs help their clients reduce business risk. By outsourcing activities to 3PLs, clients are able to reduce risks associated with issues such as compliance, environmental issues, workers compensation, unionization and EEOC.
11. 3PLs act as strategic partners in global logistics. Selecting a 3PL with specialized expertise and experience in intercontinental freight forwarding can provide considerable cost savings and peace of mind. Many large multinational corporations are segregating the 3PLs they use by the services they provide as well as by the manner in which they will interact with them. This enables the centralization of logistics management and expertise and minimization of vendors used. 3PLs involved in the centralized group of logistics providers are typically considered to be Tier 1 logistics providers are hired to help optimize transportation networks and act as strategic partners.
Tier 1 3PLs typically offer a broader range of services including warehouse management and transportation management and use technology to provide supply chain visibility, data analysis and other services. With their economies of scale and advanced technology, Tier 1 3PLs often have increased visibility into their clients’ supply chains and use this to increase efficiency, reduce costs and optimize inventory. 3PLs that provide specialized services, or work in selective modes or geographically limited areas are considered to be Tier 2 providers.
To summarize, whatever your niche or specific need, outsourcing to a 3PL may make sense for your manufacturing or retail operation. With today’s tight labor market, fluctuating economic conditions and new consumer expectations and demands, partnering with a 3PL may provide your company with the ability to have the technology, workforce, collaborative tools and expertise to help make your operation more responsive and profitable.
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