Block Chain
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How Blockchain is revolutionizing 3PL

For those who have been following technological disruptions within businesses there are a number of models to look at. Uber, Airbnb, Facebook, etc. have all played a significant role in reshaping the transport, hospitality, and media and advertising industries respectively.

However, another technology, which has been around for several years, has already made inroads into almost all industries. Blockchain, based on decentralised technology, is a “transparent distributed digital ledger (a replica, of a list of transactions in the network, present on a number of computers across the network but not a central server).”

Though this can be most closely related to the banking, finance, and related services, Blockchain technology has impacted many other industries including the third-party logistics (3PL), supply chain, warehousing and distribution sectors.

As Danillo Figueiredo, VP of International Logistics, AB InBev, has stated “Blockchain is one of the most promising technologies in logistics. It has the potential to digitalize many of today’s paper-based processes and overcome the multitude of different interfaces… Blockchain technology will be transformational to our business and the world. It reduces mistakes, digitizes information and improves the supply chain process so we can focus on our core business of brewing the best beers for consumers.”

With this is mind AB InBev has joined together with Accenture, APL, Kuehne + Nagel, and a European customs organisation to successfully test a Blockchain solution that can “eliminate the need for printed shipping documents and save the freight and logistics industry hundreds of millions of dollars annually.” Thus, the group has already tested a solution where documents are “no longer exchanged physically or digitally but instead, the relevant data is shared and distributed using Blockchain technology under single ownership principles determined by the type of information.”

Given Blockchain technology’s advantage as an alleviator of human error, high speed, and a new way of transacting digitally, many industry players as exploring opportunities in this regard. Though still to be examined more closely there are a number of different types of Blockchain networks: public and private. Public networks are open and allow anyone to participate. Private networks are for a closed group and can be extended to new players by invitation. Based on the requirement, one can choose between public, private or public-private networks.

For many players within 3PL, Blockchain technology has the potential to revolutionise certain systems and procedure, reduce costs, and increase efficiency. In many cases, though yet to catch on to the trend, is has been said that Blockchain technology is a prime candidate for inclusion within the supply chain sector. Of course, this only works across the chain if the network of companies including suppliers, warehouses, manufacturers, etc. are all completely involved. However, given the increased interest this is poised to be a breakthrough for the industry.

Regardless, adopting Blockchain technology is no easy feat. It takes time, costs, and changing an already ingrained work culture. In fact, according to findings of the 22nd Annual Third-Party Logistics Study for 2018, though results showed that while “30% of 3PLs and 16% of shippers see Blockchain as a potential application, they have yet to engage with the technology.”

Part of the hesitation stems from a lack of clearly understanding of the technology as well as embracing its benefits. As Neil Collins, regional managing partner for Korn Ferry’s North American industrial markets unit has said, “The supply chain/logistics leader must now be agile, a strategist, a visionary and a collaborator. The entire supply chain organisation must now compete with technology, and the winners will be those that elevate their people using technology, rather than replacing them with it.” Thus, the leadership must intervene from the top in order to embrace the inclusion of Blockchain.

This, at present, is a big ask and the supply chain industry still needs to place itself within its own context though there are already players working towards this goal. Large companies like IBM, Walmart, and Alibaba have several pilot Blockchain projects in the pipeline. Two of Europe’s largest ports – Rotterdam and Antwerp – have already begun work on Blockchain projects to “streamline interaction with port customers.” However, Blockchain requires the collaboration of all parties to function effectively i.e. to form the link. Here, the technology has to stem from software developers or vendors to be able to successfully “integrate applications used by the largest supply chains companies, in turn creating an incentive for other partners in the ecosystem to come aboard.”

However, once on board, the advantages are clear. Given that the supply chain works in sync with Blockchain technology in a linear or “down-the-line” manner, the transparency of each node and its visibility can benefit the entire chain. As every item can be viewed and traceable within the Blockchain, players merely need to add their own information within each record. This could help reduce fraud, repetitive data duplication, and excess paperwork.

As companies being to see the benefits of Blockchain technology there is a greater likelihood of it entering the 3PL mainstream. However, companies must understand where it can best fit within their own requirements. Finding the appropriate Blockchain partners, calculating costs such as overheads, technological and infrastructure, and ensuring a sound fit within a specific business needs to be carefully examined and addressed. It is a long-term investment and requires a great deal planning, a change in mindset and approach, and a detailed exploration of its ramifications.

Currently, many industries like those mentioned earlier are forming groups and partnerships to ‘test the waters’ with regard to Blockchain usage and adoption. This appears to be a sound point of entry for 3PL players as it provides time to understand and evaluate its merits prior to integration.

Though Blockchain has the potential to be the next big 3PL disruptor its own nature and functioning have ensured that many players are still viewing it with caution and soft hands. Regardless, the undoubted benefits are clearly visible and over the next few years more and more players will look to adopt the technology.

Business of 3pl
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Aligning your Business with 3PL

In today’s competitive, tight, and cut-throat business environment, many companies depend on third party logistics (3PL) for their supply chain management in order to reduce costs, improve efficiencies, and ensure smooth operations of their distribution and fulfilment service requirements.

To deliver value and thrive within a difficult market, 3PL providers need to align closely with their parent businesses in terms of mission, vision, and goals.  As the relationship is so significant, most big businesses have well-defined 3PL processes, systems, quality standards, performance, criteria, and best practices already in place and regularly keep a close eye on operations.

In fact, most business are keen to look to partner with vendors who will align and integrate with their own processes and practices. Thus, in a totally aligned relationship, the supply chain “shadows” the processes of the parent company and replicates the parent company’s processes, adheres to their standards, mimics their operating models and becomes an “extension” of the parent company. It is even true to say that they may become fully embedded into the parent company and a “well-coordinated arm” of the parent company.

As this relationship requires careful selection many parent companies have strict and stringent supply chain selection criteria, which they use to screen their supply chain partners. In some cases companies may also train supply chain providers in their best practices and operating procedures to ensure that the vendors understand their business priorities and their own way of operating.

Some companies also craft a strategic plan for the alignment and for the relationship, describing the capabilities that they wish their partner supply chain to develop at different stages of the relationship. These capabilities could be operational, technological, or behavioural.

In order to maintain a sound relationship it can help to carefully define the work flows at the parent-supply chain interface as well as specific goals, outcomes, and expectations. It may also be beneficial to define the responsibilities of the parent company and that of the vendor that may include responsibilities for effort, for job, for the entire system, and for business outcomes.

Wroking in business of 3pl

Sharing performance benchmarks and baselines with the supply chain vendor and of clear unambiguous expectations can also help both parties understand what is expected in terms of performance.

Aligning may also entail integration with a company’s web servers, applications and electronic data interchange standards. This allows for seamless information flow and exchange and utilisation of information between the parent’s business and the supply chain.

Such an integration would allow a 3PL partner to use this information to track and trace shipments and direct this information to the parent company’s website; thus, providing customers with the vital information they need as well as helping to improve customer satisfaction.

Of course, there is the obvious check on physical integration, which ensures that the 3PL has the capabilities to manage the business in questions. Here, some internal questions to be answered could include: “What modes of transportation and what services will you [the business or parent company] need?” “What volumes do you plan to ship and where?” “Do you have specific security or visibility requirements?” and “Are your shipments time-sensitive?” Though these are basic questions given the nature of the business they will be able to filter many potential 3PL providers, which may not be suitable.

Also, the 3PL should be capable of matching the specific needs of the business. Many providers have a variety of strengths and weakness and it is imperative that those most closely aligned to the business’s requirements are at the forefront of its strengths. If the business relies on door-to-door deliveries, intra-warehouse, or last-mile, it is important to understand that the 3PL is on par with this and its strength lie in a particular area.

Additionally, it may be necessary to check on the number of modes the 3PL provider actually has and utilises. The four common modes – rail, road, sea, and air – may be a given on paper by a 3PL but it is wise to ensure that the inter modal services being offered have the right size or fleet as well as hands-on experience to be properly handled.

Further, businesses must undertake thorough research about possible 3PLs prior to confirmation. Reputation, reliability, and responsiveness are key, especially in the logistics and supply chain arena. Also, businesses may opt to review use cases or examples within various scenarios to confirm the handling of specific situations by 3PLs. There must also be a cultural fit and the agreed recognition and understanding of the appropriate protocol, procedures, and hierarchy cannot be understated.

Finally, though clearly a given many businesses fail to check a 3PL’s customer service record. Given the scope for disruptions across the supply chain, the crisis management capabilities or the reputation of the company needs to be maintained and carefully managed. To this end it is paramount that the 3PL knows the plan of action, can ensure regular flow of goods or services, and does not lose control during a crisis.

As businesses rely more heavily on 3PLs getting the right fit to align with both business needs and present-day demands is not an easy feat. Many partnerships have failed, especially when a business has recently moved from one party to another. In this regard and given the high demands on the relationship, both parties need to be on the “same page” prior to any business commitments.

With reduced costs and improved customer service being key in the high-contested logistics marketplace, both businesses and 3PLs require a synergy that can be secure, reliable, and potentially long term. There must be clear and concise dialogue prior to and during all negotiations in order to determine the most apt working relationship once a final agreement has been determined as any hurdles or obstacles cannot be easily overcome “on the field”.

It is evident that today’s customers are fickle, brand agnostic, and ruthless, especially with a mobile in hand and social media apps awaiting comments, tweets or posts. Businesses and 3PLs must work together to create a harmonious working environment for each other as well as for their collective customers.

3PL Outsourcing
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3PL Outsourcing – Strategic Considerations

Third-party logistics or 3PL Outsourcing, is an option exercised by a business, wherein parts of its distribution and fulfilment services are outsourced to a third party. This can occur for a number of reasons including outdated facilities and warehousing systems, as the business does not have the internal capabilities internally and could be experiencing a reduction in efficiency, an increase in time and costs, as well as a decline in customer satisfaction.

Such ramifications could lead to the competitive advantage of the business, its market share, brand reputation, or profitability being diminished. Thus, to stem the tide, businesses have had to look for external solutions.

In other cases, businesses may have set-up in foreign markets and need to globalise their supply chains to better serve their customers. However, in such instances, being able to completely owning their own supply chain could be prohibitive and an entry barrier into certain global markets. Here, businesses require 3PL support to bridge the gap.

However, businesses do not always have to outsource parts of their elements to third parties. Another method could be that of vertical integration, wherein a business invests in developing and owning some of the sections of the supply chain. This can be exemplified by the Ford Motor Company, which owns forests and steel mills. Another option businesses could use is to franchise the supply chain, which provides relatively tight control and integration over the system rather than outsourcing it entirely.

3PL vendors typically provide services such as contract warehousing, packing and distribution services, transportation management, and freight and inventory management. Here, it is up to the business to analyse the areas where vendors are required and plug the holes as they best see fit.

There is also the relationship between businesses and vendors as many businesses are keen to look to vendors who can align with their goals and objectives, processes, standards and performance, and quality parameters. Such parameters can even be in the form of an economic contract or agreement between the two businesses though it has the risk of allowing vendors to exit the contract as they deem fit.

Thus, depending on the business, its health, performance, market positioning, services, and many other factors, the decision to outsource to third party vendors almost always remains a strategic one. In this regard, there are a number of considerations that businesses must address before entering into such a strategic decision.

Transaction costs are always at the heart of the decision to ‘buy’ or to ‘make’. Here, costs can boost overall, long-term growth or help entry into a new market.

Performance and predictability of performance is another criteria. Businesses are likely to choose those 3PL vendors who offer efficiency in planning, adapting, and monitoring, i.e. where performance is predictable and risk is minimised.

Value addition is another consideration. Businesses are keen to partner with those vendors who add value through embedded knowledge such as competitor behaviour, deep-domain expertise, and market understanding as well as certain unique capabilities. However, such capabilities or value additions are only ‘order getters’ and not ‘qualifiers’. The day-to-day ‘qualifiers’ for 3PL vendors still remain delivery reliability, speed, and price.

However, price may not always be an incentive for businesses. A sudden price drop could arouse doubts and reveal larger problems within a vendor’s functional area or core capabilities.

Further, a 3PL vendor’s IT capability is another significant area that businesses may examine within their own decision-making process. As IT is seen as an enabler to reducing costs, supporting innovation and service quality, it is a core area of scrutiny.

Another area for businesses is the ease of interaction or customer relationship. It is evident that positive and trustworthy customer interaction goes a long way and businesses tend to stay away from vendors who have been known to be ‘difficult to deal with’. Positive dealings could include taking responsibility for notifications about likely delays or identifying parcels that were late, or informing customers in advance along with the reasons for the delay. In today’s highly competitive market, customer satisfaction is paramount and businesses require a vendor who will ensure that delays are minimal, are clearly stated, and can even go the extra mile when systems break-down.

Of course, vendor size is also important. Here the capacity, scale, and reputation come into play. Depending on the nature of the business, companies may opt to choose larger or smaller players within certain markets. This, once again, depends on the business’ own situation within its growth and development cycle.

Finally, there is also the capability for innovation as another option for the selection of vendors by businesses. Innovation is seen as a significant value add and a great customer satisfaction elevator. Here, vendors known to be flexible, unique, or standing out within markets may well be viewed positively, especially where there is less freely open information.

However, despite these factors there are still challenges in the strategic decision-making process for businesses looking to partner with third parties. Some of these include unreasonable and unrealistic expectations from a buyer. For instance, customers may have unrealistic (and unreasonable) expectations that 3PL providers may have the effect of reducing their annual transportation expenditures by 50 percent. Though this is factually incorrect this perception must be addressed before a deal is struck. Not doing so could lead to severe consequences going forward.

In the end business must internally decide whether to opt to use 3PLs. This depends on their own growth strategy, vision, functionality, costs and market forces. Once a decision has been made however, there may space to nurture the partnership given that the right-fit provider has been sourced. To do this there must be clear and transparent communication between both parties, an assessment of ground market realities, and a clear understanding of each other’s capabilities. Of course, the relationship is key and businesses function best with both sides working together and collaborating closely – and in the area of logistics, distribution, and fulfilment, this requires even closer examination.

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Why should you use a Freight Forwarder?

Most business today have customers spread across vast geographical area even within the country, if not internationally. Hence for success of any business, it is important that the product reaches its customers unharmed, in timely manner and at a reasonable cost. If this does not happen, the business will fail, even if it has a great product.

Now imagine that a company has to ship a large package across the Atlantic Ocean (Say from the USA to some land lock country in Europe). For it, the business has to first send it to the port via truck then choose between air or sea route to cross the Atlantic. Further, it must get the product onto the ship or aircraft, (after clearing all the customs and regulatory requirements), get the delivery at the landing port across the Atlantic, clear the customs of the landing country and then again move the package by road (or another means) to the customer. For a small business, this is very daunting. This is where freight forwarders come in.

 

What is a freight forwarding business.

 

A freight forwarder is simply a business that arranges the movement of the goods for a customer from the manufacturer to the end distribution point, or to the end customer. They are the intermediary between the business and the point of delivery (end customer or distribution point). They do not move the cargo themselves; they arrange for the shipment to be picked up, transported through various modes and by different transportation providers, customs and clearing houses till it reaches the endpoint. They specialize in coordinating between various such agencies for minimum cost and speediest movement of cargo. In a way, they orchestrate between multiple service providers. They have established relationships with transporters, ocean liners and the likes, which they use to negotiate the best possible price for their clients. They use their relationship network to identify the shipping options, find the standard shipping routes and cost associated with each and select the best possible combination of available options for the shipment. All these tasks may look as formidable or complex for a simple business who just wants to get his product across, to the customer.

 

 

Services Offered by freight Forwarders

The freight forwarders generally offer a few more associated services required for the freight, which require specialized skill which may not be available with the business.

Packaging. If the cargo is going to be loaded and unloaded at several points, it needs robust packaging that can take rough handling. If the cargo is taking sea route, then the packaging must protect the cargo from sea corrosion. When shipping through air, the low air pressure and low temperatures may be a cause of concern for some of the products, and they will need sealed packaging for same. Many such specialized packaging requirements come with the transportation and other logistical options. Since freight forwarder understands the requirements and risks associated with the chosen mode of transport, they also provide (usually), the packaging that is most suitable for that mode of transport. The shipper does not have to manage additional packaging needs. This is most helpful, when there are several types of products destined for several locations with multiple modes of transportation.

 

Labeling. Cargo passing through various checkpoints usually has strict regulatory labeling requirement. Typically a cargo label would indicate following:

  •  Type and quantity of product.
  •   Handling instructions
  •   Hazardous material information
  •   Country of origin
  •   Destination
  •   Hazard and handling instructions in local language (at source and destination)

 

The freight forwarder would generally know the labeling requirements and can fulfill them more easily and precisely.

 

Documentation. Domestic and international cargo requires lot of documentation that may be daunting for a regular business. Freight forwarders have developed their expertise in knowing exactly what kind of documentation is needed for which kind of product and destination and from where and how to procure it. Some of the typical documents required for international shipping are:

  •   Bill of Landing. The contract between the shipper and the owner of the goods.
  •   Invoice. The regular commercial invoice for the product
  •   Inspection certificate. (clearance from required agency to ensure that product meets the quality as required)
  •   Insurance.
  •   Export License.
  •   Customs documents. To ensure that product can be legally sent out from the origin country and received at the destination country and is not prohibited by either of the countries.
  •   Tax papers. To ensure all the required taxes have been paid

Freight forwarders typically don’t have any capital equipment of their own. But the service they bring in can be quite valuable even for established players. They run the supply chain show, holding all the thread of various sections of the chain. The business can leave all the transportation and its related handling, packaging, documentation and other requirements to be handled by the freight forwarder and focus on what they do the best, That is making a quality product.

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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.

service provider relationship
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A general logistics service provider or a specialized one- What to choose?

The number of 3PL service providers is growing rapidly. There are many small and big specialized logistics service providers for almost every specific need and then there are providers who will meet all generic requirements. The challenge is which one should you pick for your business? The one who provides every kind (or many kinds) of service or a one who offers a specific type (or just a few kinds) of service. A wrong 3PL will either fall short of the requirement or eat into the capital eroding the margins of the business. Choosing the right sort of 3PL can make or break a business. So, the question comes: How does one select the right type of 3PL provider for his company. We will run through some parameters that can be used to decide the type of 3PL that a company should hire.

 

Services required – Before selecting any 3PL provider, one must understand the services that are needed for one’s business. While it is not complicated, many new companies don’t fully understand the supply chain of their own business. They make mistakes while defining what kind of services they need for their supply chain operations. For example, the grocery startups may typically think that they will be served better with cold delivery chain (for vegetables, milk, meat and other similar products). They often overestimate the amount of cold food that needs to be delivered as part of a grocery order (for delivery- based grocery). In another kind of business, such as apparel business, ease of return of merchandise could be far more critical than other parameters. If a 3PL who specializes in delivery only (and not return pickups) is selected for such business, the logistics alone can eat into all the margins of the company. Some businesses hugely overestimate the volumes they will achieve and end up overpaying for specialized 3PL service providers (think of utilizing only 50% of the contracted capacity of cold storage chain and paying for 100% of it)

Many times, new businesses don’t really understand their customers and end up with under-utilized resources at disposal and thus decrease their capital and cost efficiency. It may be wise for new businesses to start with generalized service providers and gradually move onto specialized ones as they grow their volumes and develop better insights into their requirements.

 

Specialized expertise – Businesses today have to carve their niche to stay relevant in the market. Within groceries business, some specialize in fresh food products, while others specialize in quick delivery. In apparel, some may specialize sending multiple items and then return all except what customer wants to buy, while another may concentrate on quick delivery but with no returns. There may be yet another apparel business which may have carved a niche in ‘made to order’ clothing (this is delivered from factory to customer, directly without any warehousing). All these services need specialized 3PL skills that should be in-line with the business’s chosen specialization. One needs to ensure that the right logistics skills – as required by the business and offered by the 3PL are identified and matched to avoid any disaster.

 

Costs – If a business provides an excellent service but incurs massive costs, it may not be able to sustain. Imagine, providing a rush delivery as standard for a $10 item (which has $5 margin ) and absorbing a $5 delivery charge for it. The customers will love it, the volumes will be huge, but this kind of delivery charges will eat up all the margins. Contrary to the popular wisdom, the high volumes will kill this business. Logistics costs are of great importance to any business and must be kept under control at all times. If they cannot be passed onto the customer, they must form a small a part of expenses, as possible. Here again, there is no saying which type of 3PL will be better suited. Spending $5 on the cold delivery of $10 or $15 grocery (e.g., vegetables) may not be sensible. But if you have a truck-full of deliveries of vegetables, then the specialized cold delivery chain will be more cost efficient, and the value proposition will be higher.

 

Volumes – If a business has larger volumes, it makes sense for it go for specialized 3PL provider. With high volumes, it is possible to cut a deal with the specialized 3PL provider for getting good rates. For smaller quantities, one may want to settle with a general service provider. However, today many specialize players club the delivery from multiple vendors to increase their utilization. A new trend is emerging where multiple businesses join hands and negotiate with 3PL providers to get better value for each one of them.

 

The decision to choose a 3PL provider is never straightforward. Multiple factors need to be borne in mind before making a choice. As a general rule of thumb, it is recommended that one should start with general provider and move to the specialized one as the business grows and there is clarity of requirements.

A key advantages of choosing a general service provider from the start is that as the business grows, the service provider’s volumes also grow and he will make investment specifically for your growing needs. This, in turn, makes him specialized provider for your requirements. In fact, he would develop services for your specific needs making it a strategic fit for your business.

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How to Shape up the Future of Trucking?

Although the transportation industry has evolved, trucks continue to play a major role in carrying and delivering freight from one point to another. That said, the emphasis has always been on taking the pressure off the trucks, in order to conserve fuel, maximize overall capacity and even reduce the underlining costs. Even then, the trends have largely been in favor of truckload transportation with these vehicles accounting for almost 81 percent of the entire expenditure module. With truckload transportation and trucking continuing to rule the roost, we actually need to look at what future holds for this industry, regardless of the booming changes. 2018 is already upon us and it’s time we embrace the new changes which are expected to stay with us for the next few years.

Recruiting a more Functional Set of Drivers

Until the trucks start plying by themselves, we would be requiring drivers. However, quite recently the transportation industry has started seeing a dearth of efficient drivers which in turn is raising some important questions. The future of truckload transportation will see the companies’ focus more on exceptional driving skills, especially for the long-hauls. Needless to say, truck drivers will be the limiting factors in the long term and the lack of skills might minimize the overall growth of trucking capacity. Moreover, once the driver conundrum is taken care of, it would be easier for the companies to increase the freight volume at a steady pace.

Growth of Dedicated Trucking Services

In the next few years, industries will witness a massive growth in the adoption of dedicated trucking services. This would involve acceptance towards a host of macro factors including the likes of capacity tightening and dedicated operations. Moreover, this approach will guarantee that customers get the exact product they have signed up for. The companies are eventually realizing the fact that customers are always on the lookout for cost-effective deliveries and that too within a reasonable period of time. Over a period of time, truckload transportation will start concentrating on the same by securing prices and the underlining capacities.

Improved Capacities

Shipping containers which are half-full can lead to higher transportation costs; thereby accentuating worries for the concerned businesses. The future of truckload transportation will make sure that containers are shipped at full capacity by using sophisticated methodologies, higher load efficiencies and cross-docking techniques. Some of the other intuitive strategies include minimizing certain one-way routes and even deploying experienced third-party logistics.

Relying on Technology

Although businesses are already concentrating on technology, it is only a matter of time that supply chains and logistics managers make it their first line of defense. Be it gauging the uncertainties of economy and workforce, technology-driven ideologies and concepts are expected to last way more than the usual ones. Moreover, truckload transportation will see continued adoption of different supply chain technologies, inventory management approaches, consolidated route tracking systems and driver tracking options courtesy the growth of technology. Each one of these techniques can help improve driver safety, performance and even fuel efficiency.

Reliance on 3PL Vendors

Truckload transportation is expected to thrive only if the companies start shifting excess baggage to trusted 3PL services. That said, outsourcing certain tasks can easily increase the overall efficiency as businesses can then concentrate more on productivity and accountability. In addition to that, partnering with certain functional 3PL companies allows businesses to express themselves in a much better way as the former eliminates additional costs and also helps deliver the goods in an efficient manner. Moreover, the 3PL service providers render additional levels of safety to the fleets and concerned commodities.

Inference

The future of truckload transportation will be dictated by how well the organizations make use of the resources in hand. While keeping up with the industrial requirements is a prerequisite, it automatically boils down to how companies express themselves in terms of logistics and fulfillment. At the end, it’s all about delivering the products efficiently to the customers while minimizing overhead costs, associated intricacies and product damages. Needless to say, the quality of drivers and fleet with determine the fate of trucking and truckload transportation and 3PL services will surely play an important role in shaping up the same. Be it outsourcing select services pertaining to transportation or adopting the best technologies for the job, future of trucking will thrive on a proactive approach.

Warehouse Distribution , Logistics 3PL
/ By Karan Mudliar / Blog • Uncategorized/ • / 1 Comment

How Distribution Warehousing via 3PL Services Improve the Market Conditions?

Enterprises focusing solely on the retail sector usually have a lot of things to worry about. While direct sales can be initiated via contract and owned warehouses, certain companies prefer third party logistics companies for distributing their products, in an efficient manner. The concept of Distribution Warehouse takes us back to the time when product distribution used to happen via retail outlets. Manufacturers would first assemble or create a product and then send over the same to shops for retail purposes. However, with a massive increase in product volume and amplified online exposure, it became imperative for the manufacturers to opt for a second line of defense.

Distribution Warehouse signifies a facility that is dedicated towards storing manufacturer’s product before the same is packed and distributed to the retail customers. The concept of Distribution warehouse actually brings the distributor into the picture, in addition to the manufacturer and customer. Not just product distribution, these warehouses also assist companies with pick & pack and efficient order fulfillment.

How Holistic is a Distribution Warehouse?

Unlike a logistics company that offers warehouses for sale and even on lease, a distribution warehouse is the brainchild of product distributors who act as the connecting link between manufacturers and retail customers. However, when it comes to reaping the benefits, every section of the sales funnel is taken into account.

For the manufacturers, distribution warehouse is a blessing in disguise. While the profit share gets compromised to a certain extent with distributors taking their cut, the flexibility on offer certainly outweighs this minor pitfall. These warehouses have also improved the market condition for third party distributors as they are the ones who invest money, workforce and time in order to amplify the storage options for manufacturers.

The last cog in this retail-centric wheel happens to be the retail outlets. With distribution warehouses supplying products to the offline and online retail stores, the credibility quotient is always maintained. The retail stores directly place product requirements and requests to these warehouses and stocks are released upon the availability.

Therefore, a distribution warehouse impacts every part of the sales funnel and comes forth as an integral part of the overall, entrepreneurial logistics arrangement.

Advantages on Offer

Distribution warehouses actually cut the clutter and simply things for the manufacturers and customers alike. Put simply, a product goes straight into a warehouse after it’s manufactured. The workers, synonymous to the distribution warehouse, pack and expedite the products via reliable courier services. Not just the mentioned perk but a distribution warehouse usually has a host of functional advantages.

  1. Timeliness

It is the duty of distributors to pack and dispatch products to customers and even select offline retailers. Most of these facilities are equipped with warehouse storage systems which keep a track of products and their desired dispatch points. Overall, the distribution warehouse offers a cohesive outlook to how the products are stored and how they need to be dispatched. This organized approach saves a lot of effort and even time— especially when the workers are concerned.

  1. Budget Friendliness
Cost friendly Logistics
Forklift with cardboxes on calculator. Calculation of shipping delivery costs concept. 3d illustration

The best part of having a distribution warehouse is that products are stored in a secured environment. Be it inclement weather conditions or the influx of rodents, a properly managed distribution warehouse is probably the best possible solution for storing the manufactured goods. This eventually cuts additional costs and the retail chains get the products in the best possible condition. Specialized packing and management services within the warehouse help amplify the revenue generation process. Be it temperature-specific storage units or something on the lines of a cold storage system— a distribution warehouse is loaded with technological innovations, precisely for preserving the condition and quality of products. This approach minimizes product damages and therefore reduces additional overhead costs.

  1. Reliability

More than the sales figures, it is the peace of mind that excites a manufacturer. While sending out products for retail purposes is quite a taxing job, distribution warehouses simplify things for the manufacturers. Since the products are sheltered in an organized and secured place, manufacturers are well assured that their business will move forward.

Bottom-Line

A distribution warehouse is probably the most important link between demand and supply chain management. Moreover, with an increase in the number of manufactures and retail products, it literally becomes inevitable to have a storage facility solely dedicated towards distribution. However, warehouse safety and management standards must also be looked at before moving ahead with any 3PL service provider.

 

 

 

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/ By Karan Mudliar / Blog • Uncategorized/ / 0 Comments

Impact of social media on 3PL industry

The logistics industry has already been massively impacted by myriad technological advancements. As the innovative measures and technical aspects continue to prosper, the opportunities surrounding supply and demand have also amplified in the best possible manner. While the customers are cognizant of the processing requirements and available options, the suppliers are finding it easier to address user queries, concerns and even opinions. Social media platforms are instrumental in driving sales as the social profiles, insights and any relatable information can now procured with considerable ease.

Why Social Media is an Important Determinant?

3pl social media

Looking closely at the 3PL industry we can infer that consumers are still optimistic regarding traditional marketing approaches and corporate relationships. Moreover, direct customers and retail-specific companies have already leveraged the power and functionality of social media; thereby enhancing the overall presence of 3rd party fulfillment services. In simpler words, organizations are readily partnering with 3PL service providers for keeping up with their logistical requirements. That said, every aspect of an outsourced service— including 3PL— is readily influenced by the social presence of the concerned customers. Based on a study conducted by Go-Gulf, almost 74 percent of the existing customer base researched the social media before moving any further with the purchases. Apart from that, around 89 percent of organizations have also been using social platforms for amplifying their presence. Overall, every individual within the demand-supply hierarchy is embracing social media and its high time organizations start using the same with immediate effect.

Social Media Impact: A Step-Pronged Approach

Regardless of the business type, Social media analysis is an approach that increases sales and assists companies with customer retention. Therefore, understanding the segregation of client data is probably the first step towards harnessing the power of social media. Enterprises must be quick to identify the best platform for a particular cause and work towards offering content over the same. Based on diverse aspects and results, it can be inferred that social presence is arguably the most efficient tool for connecting brands to the expansive audience base via relevant content.

The 3PL industry is surely one of the more progressive service providers thriving on selective content creation. According to a study conducted by Forbes, almost 78 percent of purchases are actually influenced by the active social media posts. In addition to that, third-party logistics is certainly an industry that requires a constant influx of innovative ideas. Therefore, unhindered social presence is surely a relatable metric.

While content can easily drive in exposure and brand equity, social media activity is instrumental when it comes to creating dialogues with clients and prospective customers. The 3PL industry requires constant interaction with customers and therefore it is advisable to work alongside LinkedIn and Twitter for gathering responses and answering queries. This approach, concerning social platforms, works both ways as customers can also get an idea of services, in the form of online reviews. Apart from that, consumer feedback can also be gathered across myriad social platforms— including the likes of Facebook, Google and many more. Third party logistics seamlessly connect the demand and supply chains and therefore it is important that service providers take it upon themselves for answering queries and related questions related to warehousing, order fulfillment and what not. An extensive study conducted by PeopleClaim suggests that websites and companies that have reviews and ratings validating their presence are 63 percent more likely to generate sales. In addition to that, almost 74 percent of sales amplification can be generated via service conversions provided there are positive online reviews to look at. At the end, it all comes down to leveraging an educated and engaged audience base for driving conversions within an entrepreneurial hierarchy. 3PL industry and related service providers have a host of e-fulfillment centers to take care of and having an online presence surely enhances the operations and overall image of the concerned organization.

Bottom-Line

As technological advancements galore, customers are now selectively choosing the preferred 3PL service provider by taking several things in consideration. However, majority of these determinants involve social media activities and the overall presence. Logistical considerations can either make or break a supply chain management system and it is exceedingly important to value the third-party service providers— depending upon the online credibility.

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6 ways to Reduce Food Wastage in Supply Chain

Each year more than 80 million tons of food is discarded in Europe alone. The overall cost of this wastage is more than 140 billion Euros.  Globally it is estimated that a third of all the food produced, is wasted. Most of this wastage happens before the food item even reaches the market. These figures assume higher significance when more than 750 million people around the world face food insecurity. In countries with abundance of food, people tend to throw away what they do not require or consume. This wastage not only has the environmental impact but it impacts the environment (In terms of energy and resources consumed in producing and packing the food that is thrown away). The Food supply chain along with its three stages i.e. Production, wholesaling and retailing has a significant contribution in this wastage. The cost of disposal of unutilized food adds to the cost of food wasted due reasons such as wrong or bad storage, no demand, wrong transportation, expiry before sale etc . Let us look at some of the ways that the food wastage can be reduced in the supply chain.

  1. Intelligent Packaging. Lot of food is sensitive to environmental factors such as temperature. A smart packing such as Time temperature indicator that tells how long an item has remained at a particular (generally high) temperature can indicate how soon the item will go bad and thus prioritize its sale/consumptions. Many fresh foods (many fruits) respire even after harvest. When packed, they can change the environment inside the packaging due to respiration and thus can go stale. Gas indicators built into packaging can indicate the level of gas harmful to the product. Similarly biosensors can be used to indicate the level of pathogens in the food and transmit the data to control centre. All such indicators and information about the level of freshness of food can be used to prioritize its sale and consumption before it’s spoilt and thus reduce the wastage.
  2. Packaging Considerations. Packaging of the food product has very high impact on it’s shelf life. A vacuum packed meat product stayed fresh without any significant pathogens for long time. Similarly a cling film wrapped cucumber stays fresh for over two weeks, while an unwrapped one loses moisture and becomes dull in 3 to 4 days. Apart from freshness, Fruits and vegetables packed in trays and bags reduce their wastage due to handling anywhere between 5 to 20 percent depending on the food item. Well designed packaging also speeds up the movement of the product, due to easy handling. There is a lot of innovation in packaging that food supply chain companies should look into.
  3. Transportation. Cold transportation is not new. There are active cooling trucks (with actual refrigeration and passive cooling trucks that are basically thermally sealed. Wha’ts interesting however is the temperature gradient inside the trucks, once they are loaded. Most transporters simply ‘stuff’ the truck with products without much thought to placement of product to maximize its shelf life. Even in regular trucks the temperature of food right in the centre of the truck is different than the temperature at periphery. This can have large impact on the life of the product. Even in cold trucks if they are stuffed and the center is not cool enough, the food loaded in the centre has higher chance of being spoiled. Not only the temperature, but the way fruits and vegetables are loaded can have large impact on their life. Can you imagine berries at the bottom and potatoes at the top, going over a bumpy ride?
  4. Increasing decision points in Supply Chain. Most products don’t go from point of production direct to retail shelf. There are multiple hubs and distribution points between the point of production and point of final sale. However with technology, more and more decisions are being centrally. The decision points need to be decentralized and local intelligence specific to the distribution point needs to be utilized for maximum utilization of product. Products with shorter shelf life should be sent to high turnover outlets so that they can be sold before they expire. The principle of ‘First Expiry First out’ should be followed rigorously. Smarter decisions about product movement can be taken locally depending on local conditions such as weather. If the weather is nice and sunny, the demand for barbeque related products will increase. If its cold, the juicy fruits (e.g. watermelon) would be expected to move slowly and can be shipped to other warmer areas.
  5. Cost factors. Food industry often operates on low profit margins. Subsequently all the processes are designed for cost optimization. However lower cost may not always be the best solution. For example, organic food needs to be delivered quickly. The demand for organic food is increasing and it also has higher margin. So supply chain invests a little more in quick delivery of organic food, it can capture both, the volume and the higher margin, thus offsetting the cost and making more money.  A retailer in USA capitalized on this model by making quick deliveries of Organic, less processed oils. The retailed made express deliveries right from the production point and thus maximized the shelf life of oil available to the consumer (about 3-4 months). it’s competitor’s distribution processes itself took 3 to 4 months and thus could not compete.
  6. Production Location. Point of production is also a key factor in supply chain. The closer it is to the consumer, the smaller the chain and lesser the chance of waste. Many organization prefer to have production plants closer to the source of raw material. It reduces the transportation cost of raw material, but increases the waste in subsequent supply chain. With modern technology and transportation options, it is easier to transport bulk raw material to the more distant plant. It also provides for the maximum shelf and storage life once the product is leaves the production plant.

 

Some Food wastage is inevitable. Food will rot, get spoilt and will face some logistical issues. However the amount of food that is wasted currently is unsustainable. The higher environmental cost of this waste will be borne by the next generation; all while there still 700 million hungry people around the globe. If nothing else, the economic cost of the food wastage in itself makes a great business case to stop the wastage as soon as possible.