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3PLs ARE DEVELOPING NEW VALUE-ADDED SERVICES FOR THEIR CLIENTS’ OPERATIONS—JUST ASK THE GIRL SCOUTS OF AMERICA
Customer relationships can take third-party logistics companies in completely unexpected directions. When the Girl Scouts of America came knocking on Evans Distribution Systems’ door, they asked the company to combine its pick, pack and ship support with the handling of the financial end of the organization’s e-commerce activities. “We collect the money from PayPal and pay ourselves and FedEx and distribute the remainder to the customer,” says Leslie Ajlouny, the company’s vice president for Business Development.
The project, which involved integrating the Girl Scouts’ web front-end with back-end financial systems, was brand new for Evans. “The customer was looking for a partner who could make the whole process easier for them,” says Ajlouny. “The Girl Scouts trusted us and felt comfortable working with us on this sensitive project.”
Though third-party logistics providers (3PLs) all started by providing basic transportation and warehousing, the smarter ones have been branching out for years with value-added services such as light assembly, kitting, quality inspection, sorting, testing, packaging and transportation-management services.
The trend is not only continuing but growing. Today’s leading-edge 3PLs are diversifying their value-added menu to include everything from staffing to real-estate management to technology integration. In some cases, these logistics partners avail internal business competencies to customers; in other cases, they take a leap of faith with their trusting customers to advance together into bold new areas.
Although it’s been around for years, the term “value-added services” still suffers from a degree of ambiguity. The simplest definition is that it encompasses everything beyond the standard 3PL receiving, storing, picking, packing and shipping services.
“Traditional value-added services most often involved the client’s desire to integrate disparate activities under one roof to drive operational synergy,” says Todd Johnson, senior vice president for Contract Logistics at Kenco Logistics Services.
“The more a 3PL can do within the four walls of the distribution center, the more the customers can save in terms of time, cost and carbon,” adds Alan Amling, global director of Contract Logistics Marketing at UPS. “If we’re doing some repair work or light manufacturing for a customer, they don’t have to bear the time, cost and carbon of shipping the goods to another location for these services. If we’re doing kitting or store-ready displays for the customer, we’re allowing them to postpone final disposition of the goods to better match supply to demand.”
Lately, traditional value-added services have given way to the more innovative ones that extend beyond the distribution center. Besides its solutions for the Girl Scouts, Evans Distribution Systems provides dedicated staffing to customers at their locations, handling a range of services that include quality assurance, reworking and light assembly. Kenco provides its clients with an array of real estate management services while GENCO provides one of its customers, a major cell phone carrier, a service which assures them that customers’ personal information is wiped clean off traded-in smartphones.
“As phones become more complex, some content—especially photos—tend to get retained and this can lead to carrier liability,” says Jim Hunt, the company’s senior vice president for Business Development. “We developed tools to detect whether the phone has been cleaned or whether further measures need to be taken.”
These days companies approach 3PLs for fixes to all kinds of business problems. “Once they get to know us they tell us their problems,” says Hunt. “We’re in the business of mitigating our customers’ pain points.”
GENCO was approached by another cell carrier to remanufacture used smartphones. The goal was to produce 40 functional phones from a box of 100. “By swapping out parts and buffing up the exterior we are able to create some like-new smartphones from each batch as well as others that can be sold at other echelons of the market,” says Hunt. “Overall we are able to recover a fair amount of value from these on those assets.”
The staffing services Evans offers are an outgrowth of the company’s own recruiting efforts. “We found we were able to get better people ourselves than relying on outside staffing agencies,” says Ajlouny. “We developed Evans Resource Solutions to help customers with their own warehouse operations by getting the right people into the right jobs and reducing turnover.”
Kenco also found that its internal business competencies could be put to customers’ use. “We were experienced at acquiring, owning and leasing real estate for our own and for customer operations,” says Johnson. “We developed expertise in many of the markets where our customers also operate. We have become almost a single-source real-estate service company. We work with brokers in local markets to select and lease real estate on behalf of customers. We have also managed build-to-suit situations.”
As in any business relationship, trust begets opportunity. “We’re always on the lookout for ways we can help the customer grow or save money,” says Amling. “These ideas often come from the employees who are working with the account every day. As customers become familiar with our performance, extending the 3PL relationship becomes a win-win situation.”
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