We can’t quite believe it, but the year has flown by, and it’s time to prep for the holiday season as well as next year’s business. As the inevitable approaches, now is the best possible time to do a thorough reassessment of your logistics strategies, including third-party logistics (3PL) and supply chain management.
As you know all too well, it’s crucial to adapt and improve strategies to keep up with new demands and outpace competitors. To do that, you must develop an armory of resources and equip yourself, and your team, with the knowledge needed to adapt and thrive.
But how can you be sure that you have the latest, up-to-date insights needed to come out ahead? With our team’s years of experience building and managing some of the biggest and most complicated logistics systems on the planet (think Amazon, Urban Outfitters, Zulily, etc.), you came to the right place. Leave it to us to arm you with the knowledge to tackle the inevitable challenges that lay ahead and provide valuable insights to make sure you succeed.
Here are the top priorities to focus on now to prepare for a fantastic holiday season and 2024.
Evaluate Your Current Logistics Performance
Of course, you can’t improve your supply chain management strategy without fully and honestly assessing your current state – be brutally candid with yourself here. Begin by evaluating the current performance of your entire supply chain. Examine key metrics such as order fulfillment rates, transportation costs, inventory turnover, and customer delight. Identify areas where improvements are needed and identify the pain points third-party logistics providers can address. Analyzing the following areas will help you define your logistics operations’ desired outcomes and requirements:
- Process Analysis: Take a deep dive into your logistics processes. Evaluate the flow of goods from procurement and warehousing to order fulfillment and delivery. Look for bottlenecks, inefficiencies, or waste areas affecting your overall supply chain operations. This analysis helps you identify opportunities for your logistics team to streamline internal processes, reduce lead times, and enhance efficiency and competitive advantage.
- Inventory Management: Pay particular attention to your inventory management practices. Assess factors such as inventory turnover, stock accuracy, and demand forecasting accuracy. Determine if your current practices are optimized for cost-effectiveness and customer satisfaction. This evaluation will identify areas for improvement, such as reducing stockouts or excess inventory, implementing just-in-time practices, or leveraging technology for better inventory visibility and control.
- Transportation Analysis: Examine transportation costs, mode selection, carrier performance, and transit times. Assess the effectiveness of your transportation network and consider factors such as routing, consolidation, and load optimization. Look for ways to reduce transportation costs while maintaining or improving service levels – if you don’t have a multi-node network, get one; if you have a multi-node network (or partner) and you’re not seeing material improvements to the top and bottom lines, get a new one.
- Customer Satisfaction: To gain insights into customer satisfaction, review feedback and satisfaction data related to your logistics operations. This may include customer surveys, reviews, and ratings. Assess whether your logistics processes are meeting customer demand in terms of order accuracy, delivery speed, tracking visibility, and overall service. Identifying areas where your logistics operations can enhance customer satisfaction will help you prioritize improvement initiatives.
- Benchmarking: Consider benchmarking your logistics performance and order fulfillment operations against industry standards or competitors. This analysis provides valuable insights into areas where you may be falling behind or excelling. Such analysis provides significant benefits, including educating your current logistics managers and discovering methods to reduce your logistics costs. For example, according to 3PL manager.com and Cogsy, any 3PL expecting to stay in business should check at least 95% of inbound orders. Additionally, if your 3PL’s inventory accuracy isn’t above 97%, you should consider switching to a new provider ASAP. BTW – we vastly outperform these industry standards, so see, these are the bare minimum in performance.
Evaluating your current logistics performance across various dimensions allows you to understand your strengths and weaknesses. It helps you identify specific areas for improvement, sets the foundation for developing a more effective logistics strategy, and guides your decision-making when selecting a 3PL partner for the next fiscal year. By utilizing this assessment, you efficiently initiate quality control measures for your fulfillment operations and improve your logistics functions to execute your business strategy cost-effectively.
Assess and Prioritize Your Supply Chain Needs
After honestly evaluating your current logistics performance, assess your needs and prioritize them based on their impact on your business objectives. Consider factors such as scalability, geographic reach, industry expertise, technology capabilities, and service levels required. This exercise will help you clearly define the criteria for selecting a 3PL partner that aligns with your business goals.
As mentioned in the previous section, start by evaluating your current logistics landscape and understanding your pain points and areas for improvement. Once you have assessed your needs, prioritize them based on their impact on your business objectives. Identify the areas that have the highest potential for improvement and align their service offerings with your strategic goals. For example, if you are expanding into new key markets, prioritize 3PL providers with a robust multi-node fulfillment network and experience in those regions. If technology integration is a priority, focus on selecting a partner with advanced logistics management systems and the ability to provide real-time visibility into your supply chain.
Consider the long-term contribution your logistics make to your company’s sustainability initiatives. According to McKinsey & Co., brands that make sustainability claims and back them up increase their growth by up to 8% more than brands that do not emphasize sustainable practices. This forward-thinking ensures that the 3PL partner you choose will contribute to your sustainability claims and do the right thing for the environment.
Moreover, consider any specific industry requirements or compliance standards your logistics operations must adhere to. If you’re in an industry such as healthcare, food and beverage, or hazardous materials, you already know your unique logistics needs; don’t assume your 3PL has those requirements covered. Ensure that your 3PL partner has the necessary certifications, expertise, and processes to handle these requirements effectively – trust but verify.
During this assessment and prioritization process, engage key stakeholders within your organization. This includes operations managers, procurement teams, customer service representatives, and senior executives. Their insights and perspectives will contribute to a more comprehensive understanding of your needs and help prioritize them effectively. This practice benefits all departments. For instance, it allows the supply chain manager to focus on faster shipping, sustainability, and other selling points to assist the CSR, PR, and marketers in their respective communications/promotions efforts.
Selecting the Right 3PL Partner for Seamless Supply Chain Management
Selecting the right 3PL partner is a critical decision that significantly impacts your business for years to come. We’re not being hyperbolic; this is a big decision, and any good 3PL partner will respect that by being transparent and brutally honest with you about what they can and can’t do.
A well-chosen partner brings expertise, efficiency, and scalability to your supply chain, while a mismatched partner results in operational challenges, missed opportunities, and can cost you more money than you can imagine by having to fix what they mess up.
When considering potential 3PL partners, it’s crucial to assess their industry expertise. Look for a partner with a deep understanding of your specific industry. Their experience working with businesses similar to yours, whether retail, e-commerce, healthcare, or manufacturing, will prove invaluable. A partner with industry-specific knowledge will better comprehend the unique challenges and requirements of the supply chain and fulfillment you need for your business model, and they know how to accommodate you without you having to ask.
Additionally, evaluate the geographic reach of potential partners. Consider your distribution needs and where your customer base is located – and if you are an FBA customer, you have to consider where your distribution centers are in relation to Amazon to cut shipping times and costs. Look for partners with a well-established network of distribution centers and/or fulfillment centers strategically positioned to support your operations.
Scalability is another crucial factor to consider. Assess your growth projections and future business needs. Ensure the 3PL partner can fulfill orders on time and adequately deal with your specific inventory needs despite increased order volumes, seasonal fluctuations, and geographic expansion. Scalability is vital to avoid disruptions and ensure a seamless transition as your business evolves. BTW – if you ask your current 3PL if they can scale with you, there isn’t one on the planet that isn’t going to say yes, so you need to be more savvy than just asking “if.” Ask “how,” “what specifically will change,” and “give me examples of where you’ve already done this.”
Technology plays a crucial role in modern logistics management. Evaluate the 3PL partner’s technological capabilities, including their warehouse management system, transportation management system, and integration capabilities with your existing tech stack. A technologically advanced partner will provide increased visibility into your supply chain, efficient order tracking, and streamlined communication. And DON’T FALL INTO THE SIREN’S CALL OF AI. Yes, it has its place, but not for everything and every business. Focus on intelligent automation, proven algorithms, and specific examples of how predictive modeling is formulated and applied. A lot of 3PLs provide AI and don’t actually have it or use it in unproductive ways. Don’t be afraid to ask the tough questions.
References and case studies like this one are valuable resources in the selection process. Request references from potential partners and speak with existing clients to gain insights into their experiences, reliability, and performance. Look for success stories in your industry or similar operational challenges. This due diligence will help you assess the partner’s track record and determine if they can deliver on their promises.
Finally, a strong cultural fit and effective communication are essential for a successful partnership. Assess the partner’s values, including whether they have a direct communication style, a commitment to improving efficiency continually, and a willingness to collaborate. Strong communication channels and a shared vision foster transparency, trust, and effective problem-solving. If you ask your 3PL, “Where the heck is my stuff,” and they can’t answer immediately and accurately, change vendors immediately.
Leverage Technology for Enhanced Visibility, Efficiency, and Cost Savings
We’ve said it before, and we’ll say it again: a 3PL provider is only as good as its tech. With that said (again), leveraging technology is essential for optimizing your approach to 3PL logistics since it enables enhanced visibility and efficiency throughout your supply chain operations. By adopting the latest supply chain technology, you will improve tracking, inventory management, data analytics, and communication, leading to better decision-making and streamlined processes.
One of the critical areas to focus your tech resources on is real-time visibility. Advanced logistics management systems provide real-time tracking and monitoring capabilities, allowing you to track the movement of goods at each stage of the supply chain. This visibility enables proactive decision-making, allowing you to promptly address issues, make transit adjustments, and provide accurate delivery information to customers. It also enhances transparency and builds trust with your customers.
Technology has the potential to revolutionize inventory management, making it more efficient. Implementing inventory management systems with automated processes and real-time data updates allows for better control over inventory levels, reducing the risk of stockouts or excess inventory. This technology can also facilitate demand forecasting and planning, enabling you to optimize inventory levels, minimize carrying costs, and ensure timely replenishment.
Data analytics tools are also crucial in extracting valuable insights from vast supply chain data. By leveraging these tools, you can analyze historical and real-time data to identify trends, patterns, and opportunities for improvement. For example, you can gain insights into demand fluctuations, transportation costs, or warehouse utilization, enabling you to make data-driven decisions and optimize your logistics operations. Data analytics also helps identify inefficiencies, improve forecasting accuracy, and enhance overall supply chain performance.
To bring it all together, choose a partner with the proven ability to integrate, or at least leverage, your current technology to enable seamless information sharing and collaboration. By integrating your systems, you can automate data exchange, streamline processes, and reduce manual errors. This integration provides end-to-end visibility across the supply chain, enabling you and your 3PL partner to collaborate, share real-time information, and address issues proactively. Effective communication and information sharing lead to greater efficiency, faster response times, and improved customer service.
Exploring emerging technologies such as artificial intelligence (AI), machine learning (ML), and automation can further enhance efficiency and reduce manual effort – when used in the right place at the right time. AI and ML algorithms will optimize routing, improve demand forecasting accuracy, and automate repetitive tasks. Automation technologies like robotic process automation (RPA) will streamline warehouse operations, order processing, and shipment tracking.
To make the most of technology, it’s essential to choose a 3PL partner who is open to technological progress and is willing to put resources into providing stable systems and tools. Evaluate their technology capabilities, integration capabilities, and commitment to innovation. A technologically advanced 3PL partner will provide the infrastructure and expertise to support your digital transformation efforts, ensuring enhanced visibility, efficiency, and competitiveness.
You will gain a competitive edge by leveraging technology for enhanced visibility and efficiency. It allows you to track shipments in real time, optimize inventory levels, analyze data for better decision-making, and collaborate seamlessly with your 3PL partner. By embracing technological advancements and selecting a tech-savvy 3PL partner, you will stay ahead of the curve and drive operational excellence in your logistics operations.
Standvast: Your Trusted Partner for Optimizing 3PL Logistics in the Next Fiscal Year
Achieving success in the fast-paced and ever-changing business environment requires specialized knowledge in supply chain optimization and logistics services. By constantly monitoring industry trends, evaluating performance, adjusting strategies, and promoting innovation, you can stay ahead of the game in 3PL logistics. This enables you to enhance your supply chain operations, reduce expenses, enhance customer satisfaction, and increase business growth for the upcoming holiday season, throughout 2024 and beyond. However, with so many third-party logistics providers available, choosing one that will streamline operations and transform your entire supply chain can take time and effort.
With our extensive industry expertise, broad network coverage, scalability, technological capabilities, commitment to exceptional service, and a 20-year track record of success, Standvast will meet your specific logistics needs.
With expertise in a wide range of industries and flexibility to accommodate your varying needs, Standvast serves as a dependable ally in guiding you through the ever-changing logistics terrain. Our advanced logistics management systems and inventory management software provide real-time visibility, real-time inventory data for efficient inventory management, and data analytics tools for improved decision-making. Our composable solutions ensure that we provide you with precisely the services you need, the way you need them.