- Contents
- Contributors
- LQ’s Executive Interviews
- Women in Supply Chain Management
- Developing Leadership in Business
- Revisiting Supply Chain Priorities
- RILA Conference Report
- The IT Side of Selecting a 3PL
- GS1: Innovative Empty Miles Service Enables Efficient Truck Transport
- ATA: More Productive Trucks Mean a More Productive Economy
- CITT: An Overview of Trends in the Maritime Sector
- NASSTRAC: Port Drayage, Clean Air and the FAAA
- CIFFA: Shippers Increasingly Rely on Freight Forwarders
Logistics Quarterly Magazine - Volume 16, Issue 1, 2010
3PL The IT Side of Selecting a 3PL
You may not have considered nor defined all of the supply chain factors that can affect your firm's top and bottom lines. If that is the case, it's important to choose a 3PL that has the experience to analyze and benchmark your current situation.
By Chris Norek, PhD and Doug Easley
WHAT DO YOU THINK OF when a 3PL salesperson calls? Do you know what type of 3PL they are? As a buyer, what is your understanding of how a 3PL is defined?
A problem in the 3PL industry is that there are so many different types of providers with a multitude of solutions. They aren't all experts in everything. A problem with some 3PL salespeople is that they say their company can do "anything you need." Just like with lawyers and consultants, the bad ones bring down the reputation of all others. Therefore, it is incumbent upon the good, honest 3PLs to differentiate their services and how to address your problems as a potential client. It is the salesperson's responsibility to show that their company is different than anyone else, at least for a specific set of functions.
And, while many 3PLs have broad capabilities and partner successfully with other firms to enhance their offerings, it helps to have an idea of where you might need 3PL assistance first. What operational and information technology support could you use?
This knowledge of your needs then also helps you evaluate the potential benefit a 3PL's technology might provide to your company.
Initial Challenge
The first issue you might face is not knowing exactly where you might benefit from a 3PL's solutions. What you should at least do is list the current problems you are having in your supply chain. For instance, "We don't have visibility of our shipments once they leave our facility." It is these problems that can help a 3PL representative find the best solution for you. You should create this list of issues/problems for operational and IT functions.
You may not know all of your issues, and if that is the case you would want to choose a 3PL that has the experience to analyze and benchmark your current situation. The next step is to see where IT can help in the opportunities identified. 3PLs may have all of the IT bells and whistles, but the first step is knowing which ones need to be applied and how they can be integrated into your current systems.
Your 3PL needs more than just a good IT system. Any technology solutions, of course, have to be backed up with good consultative support and a menu of value-added services in which they have current expertise. The list of services offered by 3PLs is extensive and would often include things like inventory management, order fulfillment (pick, pack and ship), kitting, labeling and last-mile delivery. Technology Needs Vary by Customer Size
Multinational corporations as well as small- to medium-sized businesses are turning to 3PLs for their expertise and IT solutions to help transform their supply chains. Shippers of all sizes can look at their supply chain needs to see how the personnel and IT solutions of a 3PL can help reduce costs, allow market expansion, improve customer service, and reduce inventories.
Shippers and potential 3PL partners are often aligned by size and expertise applicable to a company's size.
What Are Some Areas Where IT Can Help?
- Event management: Exception-based notification of problems in your supply chain occurs prior to customer knowledge of the problem.
- Carrier and supplier collaboration: Good collaborative software allows instant pricing and service levels for multiple carriers and allows the 3PL to issue RFPs on your behalf to a qualified base of carriers for rate analysis and selection.
- Warehouse and inventory management: Companies outsourcing their warehousing to a 3PL must use someone with software that allows them access to virtual inventory tools.
- Supply chain planning and optimization: Saving money is not always about lower transaction cost. Shipping smarter by building multi-stops, truckloads and pool distributions can reduce total transportation cost, and can be best done with the right IT tools.
- Supply chain visibility: Knowing what shipments are out for delivery, where they are, when they will be delivered, and if they have been delivered, as well as how easy it is to access this information, is a vital part of customer relationship management. Also knowing where inbound raw materials are 3PL and when they will arrive are essential for production planning.
3PL IT Help for Small- and Medium-Sized Businesses Today even the smallest companies can partner with a 3PL that works to employ IT solutions that often cost the shipper very little if anything to use.
The 3PLs that work with smaller companies usually offer a TMS and WMS that provide:
A Quick Note on Non-Asset and Asset-Based Providers
Non-asset based 3PLs have good tools and good personnel. They sometimes do a better job surviving during economic downturns because they can quickly and easily scale back. The non-asset-based 3PL also has some built-in flexibility to use the carriers with the best price and service on a lane-by-lane basis. This is especially important in today's environment where there are such deep discounts by carriers on their prime lanes. On the other hand, asset-based providerscan more easily offer a seamless, dedicated operation and immediate access to capacity. Both types of providers will be able to offer beneficial systems capabilities.
Conclusion
A good 3PL and their IT solutions can certainly help you through the steps to become best in class, regardless of your size. Everyone wants to keep the low rates they have now, during today's economic environment; however, the low rates will not last. For instance, in transportation, as the economy improves, capacities will tighten and fuel prices will rise, causing rate increases for shippers. As a result, companies of all sizes are going to need the right tools to handle tasks like building consolidated loads, taking advantage of multi-stops and optimizing transportation routes whenever possible. This will require tools that can often be easily found with your 3PL.
