Exam 9: Third Party Logistics

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Strategic Innovation: To provide maximum value to the customer base, 3PLs must be innovative and collaborative in solutions development. Information sharing on changing requirements is essential for the two parties to understand the dynamics of the situation at hand. Then, the 3PL must have the willingness and capability to develop novel solutions. They also need to be more proactive in suggesting strategic solutions. Technological Strength:  Customers view technology as a critical capability of 3PL service providers to improve order management, cross-chain communication, enhance shipment visibility and e vent management, and manage day-to-day transportation operations. This need for strong, integrated technology capabilities from their service providers is essential for proactive control of freight as it moves across global supply chains. Capacity Access: When domestic and global economies are strong; the market for transportation services becomes very competitive. A solution to the capacity dilemma is to work with 3PL service providers such as freight forwarders and brokers that have ongoing relationships with multiple carriers. The combined volume of the 3PL's customer base can be leveraged for consistent access to much needed capacity at competitive rates. Talent Availability: At a time when SCM is gaining stature as a strategic driver of success, many organizations face a critical supply chain talent void due to years of headcount reduction, training budget cuts, and the retirement of highly skilled individuals. One way to address the talent crisis is to hire a 3PL with strong and stable talent. Top 3PLs have the strategic foresight to invest in training, development, and retention programs that help them maintain a strong pipeline of leaders who can diagnose customer needs, develop effective solutions, and manage the implementation process. Omni-channel Agility: No longer are 3PLs merely managing deliveries to the back door of retail outlets. Today, they are supporting home delivery, manufacturer direct delivery, alternate site delivery, and variations of buy online and pickup in stores. Collectively, this makes for huge omni-channel transportation and logistics challenges that many companies are not equipped to handle with their existing processes, talent, and IT resources. Customers must work with 3PLs that can effectively handle a growing inventory base and e-commerce orders that vary in type, size, and delivery location. These 3PLs must offer flexible solutions for rapidly moving inventory through these networks to customer and managing returns from customers. Sustainability Expertise   The execution of supply chain processes has a significant impact on the environment - delivery processes require heavy use refined oil products, generate carbon emissions, and contribute to congestion. Transportation managers are under increased pressure to deploy delivery methods that have lower environmental impacts - without raising the cost or reducing the quality of service.  3PL users need to work with service providers that are committed to sustainable supply chain practices and have developed expertise over time. While many 3PLs have adopted TMS tools to help them minimize resource use through the optimization of routes and the reduction of empty miles, a much smaller group has invested in alternative fuel equipment and LEED-certified facilities.