Is Bigger Better When it Comes to 3PLs?

With the ongoing consolidation within the third party logistics industry it was only a matter of time before the question of whether bigger is better when it comes to third party logistics providers.

Of course you can’t stop these companies from gettting bigger, but you can employ some strategies to ensure they don’t take control of your supply chain and logistics operations.

Strategies

– Use multiple providers for different geographies/sites

– Maintain one site as an in-house operation

– Utilize flexible systems for directing both inbound product and outbound orders to customers so you have the flexibility to switch DCs and/or providers almost instantly should the need arise.

– Ensure your company owns/controls the buildings

– Use advanced modelling/costing tools to ensure you maintain control of operational numbers/metrics

– Have one of your trusted team members working on-site with the Third Party as a liasion.

– Employ Supply Chain Visibility to monitor/confirm service level adherence and to nip customer service breakdowns in the early stages.

At this point third party logistics penertration is only $417 billion of the total global logistics activity of $ 5.4 trillion dollars, so this trend will continue to grow and likely accelerate based on the increased globalization of the economy and increasing complexity of systems, both of which 3PL mega providers have an edge in facilitating.

As well standard operating processes and consistency regardless of where they operate in the world and a better ability to leverage cross company and industry collaborative supply chain synergies suggest all better prepare themselves to manage these mega providers as effectively as possible going forward.

Jeff Ashcroft

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