Technology can help drive 3PLs to be more efficient, agile and provide better customer service
Most companies today outsource their logistics operations to a third-party service provider. Be it the in-bound logistics required by a retailer or the outbound logistics that a manufacturer manages, it has become commonplace to contract with a third-party logistics (3PL) service provider to manage the logistics while companies focus on their core competencies.
In order to select a 3PL, most organizations would try to assess the 3PL provider on the following criteria:
In order to select a 3PL, most organizations would try to assess the 3PL provider on the following criteria:
- What are the 3PL services provided by the provider? Are my needs met with these services?
- What will be the cost of engaging a 3PL? What will be my initial cost to engage them and what will be my ongoing costs? When will I reach my ROI?
- Can the 3PL provider service all geographical locations where I exist? Do they have a good vendor base that will help in loweing costs, improving agility and efficiency in the entire supply chain?
The above questions make for the business case in selecting a 3PL. However, the issues do not end with the above. The following are some additional requirements that a 3PL provider would have to address in order to gain customer satisfaction.
All of this can be achieved by selecting from Oracle's bevy of products that are focussed on both the organization's needs (enterprise products) as well as the logistics needs (Oracle Transportation Management products). The picture below is a representation of a typical 3PL's IT Landscape when Oracle is chosen applications vendor.
- Maintain a large vendor base - 3PL providers source services from other carriers. They enter into long term contracts with carriers either on a customer's behalf, or may offer their services to their customers by doing a mark-up. Either way, it requires 3PL providers to establish a strong sourcing mechanism. The sourcing mechanism should be efficient and quick in identifying service providers. Contracts will have to be drawn and maintained with these carriers.
- Manage Warehouses - another key aspect in the logistics operation is storage. A 3PL will need to plan for storage of material in-transit. These can be stored at warehouses either owned and maintained by the 3PL themselves or at an outsourced warehousing location. Either way, the 3PL provider should have the ability to receive goods, store, unpack/pack, offer other warehouse related services before shipping the goods to their destination.
- Provider Visbility to customers - Tracking shipments, identifying bottlenecks in the supply chain, ability to track inventory at SKU level (in-transit or when stored in warehouses), the ability to request for additional services from the 3PL, etc. are all some features that customers would typically look forward to.
- Documentation - any international shipment will require a fair amount of documentation, customs filing and other statutory or federal reporting guidelines. The 3PL should efficiently and effectively manage these for its customers.
- Other hygiene factors - a 3PL could provide its customers with other value added services like mobile applications that allow them to receive alerts and notifications as well as the ability to act on these notifications from their mobile devices. Customers may also be keen on various reporting solutions that allow them to both visbility as well as to assess the health of the services rendered by the 3PL.
All of this can be achieved by selecting from Oracle's bevy of products that are focussed on both the organization's needs (enterprise products) as well as the logistics needs (Oracle Transportation Management products). The picture below is a representation of a typical 3PL's IT Landscape when Oracle is chosen applications vendor.
Comments
A very nice and crisp article. In general, there are many legacy application in such landscapes. Most of these organizations need to embark on moderization program to run their businesses more efficiently. Usage of BPM, SOA and integration platform provides them with such agility and efficiency.
Posted by: Kapil Bhatia | October 5, 2012 10:34 AM
Thanks Kapil. And yes, 3PLs are likely to have many legacy apps on different technologies. Any IT modernization will have to make use of the existing legacy apps too and that will require integration. But then, that is the content of my next blog post and a white paper. :)
Posted by: Shankar Viswanathan
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October 5, 2012 1:28 PM