Controlling Costs in Hard Times

In this time of economic downturn, third-party logistic providers can control and monitor costs, insuring a competitive edge for their customers.


“Just as ‘price and value’ will be the main drivers in the private label market, 3PLs are poised to take advantage of the restructuring and opportunities these events will create,” says Marcoly. “This would apply to food, beverages and virtually all commodities within the food logistics supply chain.”

Menner says that the future of 3PL is interlinked with how long this current economic malaise remains. The situation presents a very significant growth opportunity for 3PLs.

“You will see continued competitive forces in the marketplace, as well as some additional consolidation take place,” he predicts. “I’m hopeful that we will see increased growth year over year.”

WHO DO YOU TRUST?

Choosing a third-party logistics provider comes down to trust. Moreover, experts say it’s critical that the provider be more than a vendor; the company must be a partner and an extension of the organization.

In forming the right 3PL relationships, Evan Armstrong, president of Armstrong & Associates advises making sure that the outsourcing process for 3PL evaluation and selection is performed in a competitive and professional manner. He encourages developing a formal request for proposal (RFP). The scope of work being required by the 3PL and current logistics management processes need to be clearly defined.

“Warehouse and transportation cost information as well as shipment data should be included and be as detailed as possible and main key performance indicators (KPIs) should be incorporated into a standard contract for logistics services,” he says. “Common KPIs include percent of on-time shipments, order-picking accuracy (percent by order) and order fill rate measures.”

He also holds that information systems requirements for transportation management and warehouse management have to be developed, whereby a minimum of three and a maximum of six 3PLs should receive the RFP.

“The goal is to use available information to isolate potential 3PLs with the necessary skills and gauge their level interest in working with you on a project before ever sending them a RFP,” he says. “Once they receive the RFP, you want the 3PL to put in a significant amount of effort and really go after your business.” –J.K.

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