Maarten Baltussen, VP EMEA Third Party Logistics EMEA, JDA weighs in on the key ingredients for 3PL success in an omnichannel world.
Today’s global business supply chains are complex beasts. Increasingly central to their success are the logistics networks that support them.
Across Europe, 3PLs are evolving their operations to help retail and manufacturing customers deal with supply chain challenges presented by the omnichannel environment.
This new, customer-centric business environment commands that supply chains must no longer be static, but resilient enough to flex according to demand in a profitable way.
3PLs are in the perfect position to help manufacturers and retailers overcome these hurdles, but a number of factors are critical to their success.
Location, location, location
It goes without saying that 3PL locations should be situated in close proximity to their customer’s businesses markets, in order to serve them most efficiently.
Once geography is taken into consideration, the next step is assessing the quality and breadth of its transport infrastructure; the ideal warehouse should be situated near to good road links, as well as airports, railways and shipping ports.
When looking at particular features of warehouse facilities, bi-directional scalability can be of great benefit.
Being able to increase warehouse capacity during busy periods, and reduce it when business is slow, will enable 3PL business to maximise cost-effectiveness, regardless of the particular demand cycle they are in.
A dash of tax and regulation
Market turmoil, intense competition and global expansion have together contributed towards an unprecedented increase in regulatory compliance.
3PL businesses are recognising this issue and as such, they must have a good understanding of the regulatory environment they operate in, both at a domestic and international level.
Otherwise, they could expose themselves to huge risks, by the way of costly trade penalties and business disruptions that could negatively impact customer relationships.
Adding technology to taste
Embracing the right mix of supply chain software can really bring 3PL supply chain to life; enabling them to meet customers’ omnichannel business demand in an efficient, intelligent and profitable way.
Warehouse management technology is a good starting point, as it allows 3PL businesses to optimise warehouse inventory as well as the resources needed to handle it.
The right tools can give 3PLs accurate and real-time visibility on inventory levels and demand, which can help to prevent overstocking and stock-outs of customer goods.
Improving inventory accuracy won’t just help 3PL businesses better support their customers’ ability to serve its own customers, but it will also ensure that 3PLs are not wasting money on additional warehouse capacity.
In fact, warehouse management technology has been responsible for helping Kenco, the largest 3PL company in North America, achieve a 50% productivity increase when it comes to warehouse replenishment, as well as 30% increase in businesses volumes, using the same space and workforce.
Moving beyond the warehouse, transportation management tools can play a key part in driving business performance.
3PLs have forever faced the challenge of streamlining their transportation and logistics management processes to maximise efficiencies, increase customer satisfaction and ultimately drive greater profit margins.
Within this, reducing CO2 and the number of empty miles has climbed higher up the agenda, as the movement towards lowering the global carbon footprint grows.
Transportation management tools can help 3PLs achieve all-round efficiency by allowing effective management of the entire transportation process – from long-range strategies and operational planning to day-to-day execution.
Cloud on the horizon
By harnessing the cloud properly, 3PL businesses are able to deploy and maintain consistent warehouse and transportation management systems across multiple business locations, from a central point.
This ensures that each facility is always equipped with the latest technology and processes to enable them to run optimally.
By putting the above into practice, 3PLs businesses can remain relevant and competitive in today’s omnichannel world.