Use 3PL services for a growing business

More and more businesses are using third-party logistics service providers. Building an in-house supply chain is expensive, slow and a learning process riddled with mistakes. On the other hand, outsourcing the supply chain is efficient, quick and adaptable. The benefits of using 3PL are more than just reduced initial capital outflow or getting expertise. With ever-increasing competition, businesses need to focus more and more on their core activity and reduce or divert resources from non-core activities while extracting the best out of them. Managing supply chain is one such activity that can be efficiently outsourced. In fact outsourcing such non-core activity can be strategically beneficial in the long run for a business. Here are a few advantages that a growing business can get from outsourcing its logistics.

 

Scalability – Building a supply chain requires time and investment. Underutilized supply chain represents locked capital which is bad for a growing business. On the other hand, peak utilization limits the growth that operations can achieve. However, with outsourcing, the supply chain capacity can quickly increased or reduced without much impact on scale. Quick scalability is one of the biggest advantages an outsourced supply chain can offer to a growing business. Third-party providers are geared to scale their operations depending on their client’s requirements. They invest their capital in spare capacity and clients don’t need to make any capital investment. Further, if the scale of operations reduces for a client, the extra capacity is simply sold to another customer with no impact on the first client.

 

Optimization – Logistics is frequently about optimization of the resources such as packaging, transportation, route and delivery time for most efficient use of resources with minimum time. This planning and coordination requires special skills that are expensive and hard to find. Further using the skilled and costly planners only for one business may not be the cost-efficient. 3PLs bring in planning and optimization as their core skill. They plan for most optimal warehouse locations, delivery modes and routes and club cargo from multiple clients to bring the costs down. High priority deliveries are also clubbed together to bring down their costs (as compared to individual high priority delivery). This degree of optimization is difficult to achieve for a small business without significant investment and dedication of resources, which can burn quite a hole in the pocket, as the company grows.

 

Constant innovation – Supply chain requires continuous innovation in terms of packaging, equipment, processes and even transportation vehicles. For example, newer material for pallets keeps making them stronger and lighter, new methods of merchandise scanning makes tracking more efficient, more modern robots make stacking and picking of products much faster and more comfortable. Similarly, new transport vehicles (newer trucks) keep reducing the cost of transportation. The problem is that all such innovation requires an upfront investment and business cannot make any new investment until ROI from the previous investment is realized. But with higher utilization, 3PL have faster ROI cycles and can bring in capital-intensive innovation much quicker. Besides logistics being their core business, 3PLs thrive on constant innovation in supply chain to reduce costs and improve service.

 

Quick movement between supplier – While it is a good idea to maintain long relationships, business realities sometimes require to change the vendors. This need for change could be for many reasons such as better rates, larger scale of operations, wider network spread, or simply a kind of service that is not being offered by current supplier (even today many 3PL suppliers do not offer cold storage chains). As the business grows, the supply chain requirements will also change. The scale of material handling will increase. The variety of products being sold will also increase, and this will need different logistics skills. In house logistics department will need time to change and may even put up resistance to change. Improving the skill set of the whole department is not possible in a matter of few days (or even few weeks). But changing supplier is just a matter of negotiation (apart from identification of-course). The business operations are not vastly disrupted while the change of supplier happens. As is well known, changing or upgrading a department of the business is extremely slow and tiresome process, but changing a vendor is easier.

 

Lowering of Costs – Development of supply chain needs space, warehouses, packing machines, moving and stacking machines and vehicles (as large as up to trucks and lorries) making them capital intensive investments. Also, logistic operations are equally expensive, if not more. Many times, the supply chain capacity is not fully utilized leading to a high wastage of money. The 3PL absorbs the capital investment and can depreciate the equipment much faster owing to its higher utilization. The capital cycle (for supply chain) is much more efficient for 3PL as compared to in-house supply chain investment. There is no doubt that unless the volumes are huge, 3PL makes a lot more sense regarding costs and investment for any business.

Further, as the product moves through regions, various agencies or external companies come in picture. A product moving across the border will interact with customs, excise, clearance house, export regulators. Businesses need working relationships with all of them for its cargo to move quickly and efficiently through these agencies. Developing and maintaining these relationships needs resources which cost money. As business volumes grow, the interactions with agencies also increase and need more resources. A 3PL maintains these relationships for its customers so that the businesses do not have to it themselves, and they do it more efficiently.

 

Developing supply chain is a slow and costly process and often requires changes that are expensive. As the business grows, the inefficiencies of the supply chain start to glare out. The growth phase is precisely the time when companies need an efficient supply chain. An outsourced, third party supply chain will not only eliminate the inefficiencies, but it will also bring in innovation to handle the large volumes of growing business, that may provide the edge, that a growing business needs.

Revamping Supply Chain Setups with Big Data Analytics

Supply chain management requires enterprises to deal with diverse data sets. Be it truckloads of structured data or even unstructured bits of information, supply chains have long been driven by quantifiable indicators and statistics. However, the revolutionized industry urges organizations to inculcate real-time analytics which in turn brings them a step closer to the concept of Big Data.

Adopting Big Data Analytics: An Innovative Start or A Lingering Issue?

Implementing Big Data within a supply chain schema isn’t expected to bear fruits overnight. The application requires an influx of data forces, mass validations and development systems for deriving vital insights regarding situations, products and other metrics involved. This, being a multi-faceted approach, requires customers and professionals to be patient. Therefore, it wouldn’t be wrong to assume that Big Data Analytics has arrived but companies are still falling behind when Big Data insights are being looked at.

In simpler words, the modern day application of Big Data analytics— targeting supply chain management— requires a deeper and surely a clearer sense of approach.  It isn’t surprising to see that many companies have been slightly skeptical when it comes to implementing Big Data analytics within the supply chain hierarchy as compared to other working areas like manufacturing and marketing. Although, analytics is innovative to work with, the apprehensions are still hindering seamless adoptions.

Driving Efficiencies Home

There are several factors pertaining to supply chain management which require immediate attention.  Be it the vehicle conditions, machineries associated with a setup or even inventory solutions— there are a host of structured intricacies to deal with.

The presumably successful application of Big Data has been quite significant in driving better sales as many enterprises have already embraced the concept— wholeheartedly.

Let us quickly analyze a few aspects that concern supply chain management and the improvements bestowed upon— courtesy Big Data analytics:

  • Handling Unstructured Data Sets— The likes of transportation logistics, inventory management and even warehouse management hardly offer structured data. Having Big Data analytics at the helm allows companies to use clocked digital cameras for monitoring changes, stock levels and a host of other requirements which are unstructured in nature.
  • Dealing with Forecasting— Flexibilities offered by Big Data analytics work perfectly when it comes to supply chain forecasting. The existing camera data can be paired with diverse algorithms and used for predicting stock management scenarios. This technology is suitable for distribution centers and warehouses where resupplies need to be essentially predicted— sans human interactions.

Pillars of Big Data Analytics

Analytics synonymous to Big Data needs to have two focal points— making it usable and scalable at the same time. Being ‘Predictive’ is the first pillar of Big Data science which tells enterprises about the course of action. Now with the data sets available, the analytics needs to be ‘Prescriptive’ as well— further determining the modus operandi associated with a specific supply chain metric.

Needless to say, every supply chain setup is better off with Big Data analytics in place and it’s time enterprises start identifying the true potential of this technology which has already been hailed by the customers.

Dealing with Unstructured Data

While analytics caters perfectly to structured data sets with defined fields, it is challenging to pair up Big Data insights with unstructured bits of information. One such example would be monitoring shelf space in real time. This is one aspect of supply chain management that doesn’t come with a predefined layout. Shelf space might vary with time and the only way analytics would work is by implementing sensors for detecting logos and brand names— based on visibility.

Unstructured data shall only make sense if collected in an innovative manner. The idea here is to gauge the sales systems for points of resonance.  With the influx of Big Data logic, supply chain managers have started looking at the underrated data elements— including the likes of forecasting, social media and weather. These elements have a massive impact on sales and the inclusion of analytics is expected to leverage them in the best possible manner.

As with every aspect of industrial proceedings, Big Data is slowly but steadily making inroads into the world of supply chain and logistics. Moreover, even enterprises are finding this technology easy to use with the sudden surge in the volume of unstructured data sets— clubbed with the usual levels of traditional data analysis. Big Data usage minimizes human indulgence and readily focuses on the broader time frame in hand.

Overall, it’s all about using data sets smartly and only Big Data analytics can help enterprises achieve the same.