In view of an increasingly global and co-dependent economy, as well as a need for organisations to maximise efficiency, minimise costs and meet the exacting delivery expectations of customers, there has been a sharp rise in demand for the specialist solutions offered by third party logistics (3PL) providers. These solutions are varied and include warehousing, distribution and transportation as well as other added value services such as assembly and packing, among others.
Within the current climate of austerity and uncertainty though, does the logic of outsourcing your supply chain management to a third party Logistics provider stand up to scrutiny?
Austerity involves minimising expenditure, reducing debt and even making staff redundant in order to make savings. However, is cutting costs always good for business?
Many businesses make the mistake of making cuts on certain operations that have a big impact on the profitability of their business, especially if the cuts have been made to the supply chain. If you believe your company and your customers are going to receive high quality customer service if you move to a low-cost logistics solution, then maybe it’s time to think again! Allow us to give you a recent ‘real-world’ example from one of our business associates:
The company in question were looking to make cost reductions to their supply chain and decided to switch to an alternative 3PL provider. Almost immediately after switching, goods were being reported as damaged and agreed collection and delivery times were being missed. When the company questioned their new 3PL provider, there was no apology, just a simple ‘well these things happen’.
Due to these mistakes, the firms expenditure rose and their customer experience was compromised. The culmination of which lead to the company moving their operations back to us. Your brand is a fragile thing, so let us remind you…
There are three factors that make quality 3PL solutions stand out from the crowd: systems, infrastructure and people.
While systems and infrastructure are vitally important, the most critical factor in the delivery of exceptional 3PL solutions, is making sure you have the best people at all levels of the organisation. A strong management structure is key and that must be complimented by a multi-skilled workforce that can work across multiple contracts, allowing for increased capacity without causing service issues.
If you are considering choosing to partner with a low-cost 3PL provider, first ask yourself;
A: Can your business afford even a small drop in the quality of your service?
B: What are you going to do if your products are damaged in their care?
C: When deliveries go wrong, who will the customer blame?
D: Who will refer you when problems keep happening?
E: How will your business continue to grow if your customer experience is being compromised?
F: Will staff moral be compromised amidst the organisational changes?
We strongly believe that receiving a high quality service is not possible with a cheap logistics solution. Building relationships and partnerships with your customers takes time, and these relationships can quickly disappear if mistakes keep happening. While you may save money in the short term, you may find yourself spending even more money in the long term, preventing your business from growing and being profitable. The efficiency of your supply chain is critical for the success of your business, and if there is a glitch, it can be costly. Where is the logic in that?
If you would like more information on how we consistently deliver a reliable, cost-effective and profitable supply chain solution, get in touch.