3PL Industry Update: Combining Technology and Industry Expertise
By: Frank McGuigan, President and Chief Operating Officer, Transplace
The 3PL industry continues to evolve and grow – presenting tremendous opportunity for shippers. As we get ready to head into Q4, I wanted to briefly comment on some of the changes that we are seeing in the market.
Speed and Market Choice are Key Factors
In recent years, shippers have encountered new standards of velocity, market choice and cost for their products. The consumer, who is everyone’s end user, is demanding better variety (SKU proliferation) and greater availability at the lowest possible cost – further increasing complexity and intensifying pressure on supply chains. This has created what some in the industry are referring to as “supply chain impatience.”
In order to meet continually-changing consumer demands and expectations in an increasingly competitive market, shippers need a fast, efficient supply chain. As a result, velocity, visibility, predictability and control are more important than ever. But just how do shippers get there?
Technology and Industry Expertise Combine
About 10-15 years ago, shippers would engage with 3PLs simply as a means to access technology. Transportation management technology has evolved, and there are many enhancements to its functionality that are delivering greater efficiency and visibility throughout the supply chain, offering a much higher return on investment for many shippers. And today, that technology is much more ubiquitous and more readily accessible.
However, what’s as critical as this advanced technology, if not more important, is the deeper, understanding of the businesses and the key processes that are necessary for supply chain excellence within the specific verticals in which a shipper resides. This experience, as well as the strength and depth of the 3PL’s network, is what enables the ultimate value delivery that shippers are trying to derive from a technology investment. If I want to get to the North Pole, a compass is just one of many factors necessary to achieve the mission. Given all of those factors, shippers should find a partner that has a demonstrable ability to deliver and execute throughout the entire supply chain, creating both enhanced velocity and a high level of service to customers.
Understanding and executing upon on-time delivery is a given nowadays. 3PLs are being asked by shippers to create better metrics to provide both added understanding and a deeper perspective as to what’s occurring inside their business both yesterday and in real time. Status updates that are more timely and proactive are becoming essential in the supply chain: the standards keep getting greater, and so should we.
True Partnership to Drive Operational Excellence
Is a great transportation management system automatically going to “fix” your entire network? No. You need the right strategy and processes behind it. If you’re looking for technology to incorporate into your transportation operations, you should first take the opportunity to benchmark your entire network. Then, and only then, can you determine what technology solution, or if outsourcing to a 3PL, is best for your business. From an operations and carrier relations standpoint, it’s critical to find the right technology that includes data management and real-time status that will enable you to use all parts of your network.
For shippers, a 3PL should not just be prescribing a technology for your transportation network, but must truly have the ability to offer the operational expertise and ideas for continual improvement necessary to drive supply chain excellence. Transportation optimization is more than moving freight at the lowest cost or finding a short-term performance boost; it’s about continuous improvement delivered through smart, data-driven planning and efficient execution. If you do choose to outsource your transportation management, your 3PL should be a true partner, allowing you to step “behind the curtain” and see exactly what is going on in your supply chain network.