Here are just a few situations where your provider’s size and scope could affect your supply chain success—and where it may make sense to go with a global 3PL.
When benchmarking isn’t an option: Overseas logistics is still relatively new territory for some companies. As a result, its success frequently requires the use of engineering practices such as optimization and simulation.
Not only are large global 3PL more likely to have the sophisticated hardware and software needed to pull these practices off, they’re also more likely to have the caliber of in-house engineering personnel required to run these systems and calculations correctly.
Plus large global 3PLs are going to be able to provide your company with a more reliable landed cost calculation for most international venues you’re considering, because they already have a thorough grasp of the real-life challenges and costs that go hand-in-hand with doing business there.
When you want to be extra-sure you’re complying with the latest international regulations or taking advantage of the most advantageous certifications: Whether it’s 10 + 2 or the Prior Notice Of Imported Food Final Rule, there’s an excellent chance that large global 3PLs will not only be current with the latest import/export security regulations, they’ll usually be the first to comply, because hundreds of their clients routinely depend on them to master and handle regulations like these on their behalf.
Global 3PLs also tend to be some of the earliest adopters of security certifications such as C-TPAT, which can help speed up a company’s product flow through Customs.
When you’d like to address a challenge from a variety of angles: There are many ways to defray the cost and improve the efficiency of doing business internationally.
Larger global 3PLs can usually give you solid firsthand advice about the pros and cons of each option you’re considering because they’ve been practicing these techniques throughout the world. Just as important, their advice will be objective, because global 3PLs with myriad locations and service offerings don’t have a vested interest in trying to sell you one specific technique or location over another.
When you could use better negotiating power: Large global 3PLs tend to purchase higher quantities of individual logistics services than their smaller counterparts, because they subcontract transportation and other services for hundreds of clients. As a result, they can often qualify for better discounts and other advantages like better equipment availability guarantees on your behalf.
When connectivity counts: Many international plants and distribution centers still aren’t as systems-intensive as their U.S counterparts, and that can make it difficult to monitor inventory, eliminate waste or pilferage, and comply with customer requirements such as UCC 128.
Larger global 3PLs typically offer a variety of technological solutions that can help. They’re experienced at implementing WMS start-ups in low-tech locations. And they’re adept at helping companies find a way to meet systems-related mandates even if the factories or suppliers their companies are shipping from don’t have computers, printers or EDI connectivity.
In addition, large global 3PLS have usually invested millions of dollars in end-to-end shipping visibility tools, which can help companies make more current inventory deployment decisions while goods are en route.
When you could use swifter disruption support: Consider this scenario—your company booked space on a container ship sailing out of Shanghai. But unfortunately the truck carrying your shipment broke down and you missed the sailing.
That’s just one of the unforeseen international shipping glitches a global 3PL can adeptly help you deal with. Many offer “Plan Bs” like international air-sea transportation combinations that can be implemented almost as soon as you know disruptions will occur. Additionally most have easy access to—and established relationships with—everything from expedited transportation providers and overflow facilities to U.S. deconsolidation centers, all of which can be employed to minimize the impact of international shipping delays.
When you need a presence in a particular market yesterday: Using 3PLs’ existing facilities has always been an easy way to establish a near-immediate logistics presence in any market. However it’s especially handy in international markets, where figuring out who the key players are and navigating the complex cultural and legal requirements is a complicated endeavor that can take months or years.
Chances are good that most large global 3PLs have been operating in your international venues of choice for years. Among other things, they’ve probably already secured space in the best available distribution centers (or built one themselves), hired some of the best local managerial talent and jumped through every legal and cultural hoop your company has just begun to think about.
As a result, your supply chain in that country can be up-and-running —and running correctly—far faster.
—By Tony Zasimovich, APL Logistics, Scottsdale, AZ
Five Steps To Choosing A Global 3PL
In your search for just the right third-party logistics provider to control and manage your global food supply chain, these are a few top considerations to keep in mind.
1. Experience: “The first thing you should ask is does the 3PL have the experience handling the types of products you will be dealing with in your global food supply chain,” says Dick Armstrong, chairman, Armstrong & Associates Inc. of Stoughton, WI. “If I am importing frozen shrimp from the Far East, I want to know how much the potential 3PL is already involved in handling this product.”
2. Financial strength: It is critical to assure that the potential 3PL will be around for the long term and that it will be providing a solution you can rely on for future business, says Jim Butts, senior vice president of C.H. Robinson Worldwide Inc. in Eden Prairie, MN. “Financial strength also means that the company has the ability to invest in the latest technology, which is critical in providing the necessary global visibility.”
In today’s shaky global economy, customers are looking for longevity and durability in the business partners they choose to work with, adds Kip Douglas, director of transportation and logistics for Jacksonville, FL-based Crowley Logistics Inc. “There have been near-record-breaking numbers of trucking companies and even 3PLs that have gone under in the last few years. So food companies should make sure a potential 3PL is a stable company by asking to see their financials. I think Crowley’s 115-year history speaks well to our longevity.”
3. Global presence: You have to understand in which countries your potential 3PL is operating, advises Steve Simonson, partner, Tompkins Associates in Raleigh, NC. “Find out how much coverage they can provide in terms of transportation and logistics across the world and in places where they can’t provide coverage, what will they do for you to make sure you have the coverage you require.”
“There is no substitute for global presence in effectively managing a global supply chain,” Butts says. “The 3PL should be able to prove it has the expertise required to get things done when they need to get done. I am talking about not just competent problem solvers, but seasoned experts who can prevent problems from occurring in the first place.”
4.Account management strategy: Butts notes that C.H. Robinson’s account managers are empowered to make the decisions they need to make on behalf of customers. Of course, these decisions will be in line with customer expectations and objectives. “Our account managers have a good understanding of the customers and the idustries they represent,” he says. “They have a thorough understanding of the complexity of the global supply chain because they work closely with multiple customers and multiple carriers so they are virtual extensions of the customer. One of the signs of a company without the required global expertise is when that company hires a consultant to tell them what needs to be done.”
5.Building partnerships: The relationship between a food company and its 3PL is all about building a partnership, says Bob Weist, vice president of logistics sales for Crowley Logistics.
“Our job is to team with our customers so we understand what their supply chains look like and where we can provide value to them,” explains Weist. “We ask our customers what their lead time is on particular products and what modes of transportation they are considering. Once we have had extensive discussions with potential customers, we build several model options to offer them.” —A.T.