3PL Back To Basics: How to Stay Ahead of Competitors Without Sacrificing your Bottom Line
In today’s competitive logistics and supply chain space, 3PLs must focus on staying ahead of the competition while minimizing costs. Building the fanciest mouse trap is okay only if customers are willing to pay the price. Cost conscious 3PLs utilize these fundamental strategies to stay ahead of their peers.
Retain Your Associates
Employee turnover increases costs, harming the bottom line. Recruiting and training new associates are also expensive. It is less expensive to increase existing associate pay and benefits than to recruit, hire and train a new associate.
Additionally, there is the financial and organizational risk of the new associate not working out.
Invest in Your People
Hire quality people. Provide training and timely performance feedback. Training does not need to be outsourced at an additional cost. Instead, use direct management resources to reduce training costs. Involve your associates in developing the training to better understand where their gaps in knowledge exist.
Structure Task Assignment
Use experienced employees to perform put-away tasks. They know the product and stocking locations. This helps keep productivity high and shrinkage low. New employees should start on outbound-order fulfillment to learn the products and procedures. Outbound is also easier for supervisors to monitor and audit during the pack-out stage.
Listen to Customers
Industry experts may claim the latest trend is essential for 3PLs and “now is the time to invest in the future.” Has any customer or prospect asked about this trend? What was their response when you asked them about the trend? If customers do not see value and are not willing to pay for the service, a 3PL would be foolish to subsidize the cost.
Provide Business Intelligence to Customers
A 3PL’s systems contain important data for clients. A good 3PL helps transform data into actionable information clients can utilize to transform their business. BI&A tools don’t need to be expensive. Research what is best for your organization and clients. Many clients expect BI&A tools as table stakes these days, but there is no reason to overspend on the solution.
Listen to Associates for Continuous Improvement
Associates working the frontline have valuable insights on what works and what does not. Use daily standup meetings combined with regularly scheduled continuous improvement workshops to glean valuable insights from those performing the work. Continuous improvement drives waste from operations to improve the bottom line.
A structured cycle count program that addresses discrepancies when they are discovered improves inventory accuracy. Improved accuracy in turn reduces claims paid out to clients. Prevent claims improve the bottom line.
Measure and Manage Fulfillment KPIs
Focusing on increasing outbound orders is wasted if the orders picked are inaccurate. Fulfillment accuracy must be monitored otherwise claims costs eat into the bottom line.
Network with Peers
Industry trade groups are a good way to stay abreast of what peers and competitors are doing. Engaging peers and competitors will likely provide a wealth of information.
Offer Service Customization
Many 3PLs will argue customization increases cost and therefore should be avoided. It does increase cost. Be flexible with clients, customize solutions and charge accordingly. Ensuring the charges are fair and correct prevents the 3PL from sacrificing the bottom line.
The best way for 3PLs to stay ahead of competitors without sacrificing the bottom line is to focus on the fundamentals. Let your competitors become distracted and lose focus on the basics. Successful organizations focus on the details day in and day out. Failure to focus on the fundamentals results in expensive lessons.
Adam Zaranski, director of Sales & Marketing at Boxzooka Fulfillment & Global Ecommerce, has more than 25 years sales and operations management experience in e-commerce fulfillment, logistics and supply chain. Prior to arriving at Boxzooka, he held various sales and operations management roles at such companies as Ryder Supply Chain Solutions, Kane Logistics, Airborne Express, Select Express & Logistics Unilever HPC and The Home Depot. He holds a B.S. in Logistics & Transportation from the University of Maryland and an M.B.A. from Fairleigh Dickinson University.