Outsourcing 3PL – Warehouse and Distribution Partnership for Efficient Fulfillment
There are many moving pieces to any business operation that involves the selling and/or movement of products. Whether they’re consumer products or business to business supply relationships, the activities involved in taking products from source to customer are many. Larger companies may handle their supply chain from end to end, but this is almost entirely a thing of the past.
Today, large and small companies alike have many partners. Partners for transporting freight (raw materials or finished goods) and supplies; partners for storing goods until they’re ready for delivery; partners for transporting goods locally, nationally and internationally. Warehousing, distribution and fulfillment are essential links in supply chain management. Not all 3PL’s are created equal, and it may be time to consider a partner that can assist you throughout the chain.
Warehousing, Distribution and Fulfillment – Vendor Efficiency
What is vendor efficiency? In sum, it can be described as seeking expert service providers that can handle as many of the activities that you require on an outsourced basis. The premise is that you have to manage as little relationships as possible if and when you can achieve expertise or capacity not otherwise found in-house.
In the case of a retailer who sells its own branded products, this may mean selecting a vendor who can import offshore manufactured products, store them locally, and distribute to retail points or pick-pack-and ship directly to end consumers on your behalf nationally (and internationally). This import to fulfillment model can be quite efficient and cost-effective. Further, it reduces human resource burden and supervision resources needed internally in most cases.
Having an “expert” as a warehousing, distribution and fulfillment partner is vital. In other words, if you are reviewing prospective third party warehouse and logistics partners and you have to explain what you need (other than things that are very specific to your business) – beware. Experts should by definition should be aware of industry best practices, and the conversation should be an engaging exchange where potential 3PL partners are not only listening, but offering ideas for efficiency and achieving maximum cost effectiveness.
Of note, however, is that you must not have “all your eggs in one basket”. When dealing with a partner handling several aspects of your operation (i.e., all of your supply chain) you risk difficulty if that partner should fail. Also, it may provide it leverage in negotiating rates with you. These are points for consideration and alternate suppliers should be close at hand and contingencies in place.