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Managing 3PL & Supplier Relationships
by Femi Boyede CEO Koinonia Ventures Ltd

WHAT IS 3PL

A 3PL is a company that provides more than one logistics service, such as transportation or forwarding and warehousing. Initial 3PL companies were companies who may have provided trucking and moved into providing additional services to maintain their existing customers.


WHY 3PL

To compete in this fast-paced, international marketplace, more and more manufacturers are relying on logistics providers, like Weber Distribution, to supply their customers with a higher level of service, as well as a measurable cost savings to their bottom line. We know it takes a major commitment to switch from in-house management to a third party, but here are a few more advantages to consider:

improved customer service 
reduced staffing and vendor costs 
outside expertise 
ability to concentrate on core business 
higher productivity 
lower administrative costs 


SERVICES PROVIDED BY 3PL

Warehouse management 
Inspection Services 
Inventory control. 
Inventory forecasting. 
Distribution management. 
Freight forwarding 
Inventory scheduling. 
Order fulfillment. 
Supply-chain management. 
Client invoicing. 
Processing of loss and damage claims. 
Transportation
Procurement
Advisory 


DRIVERS OF 3PL

The size of the 3PL market is hard to definitively gauge. It varies depending on the Outsourcing to some degree has existed for years. Using for-hire trucking instead of private fleets, freight payment plans, freight forwarders and public warehouses are just four examples. Four key opportunities drive the potential size of the 3PL market; and these are key drivers in most business. They are:


Global sourcing and selling

Traditional sourcing with local suppliers has given way to sourcing based on best price to meet the product specifications. That opened up purchasing to international suppliers. This change, in turn, added complexity to the supply chain in dealing with suppliers who are thousands of miles away, not just a phone call away, and where delivery times for ocean freight can take weeks. Companies must deal with the impact of a global supply chain. 3PLs can be seen as ways to manage that international logistics need, especially for companies that are more comfortable with domestic than with international example is the door to door services


Supply chain management

SCM has emphasis on speed to improve inventory velocity, turns and cycle time reductions. Firms can be reluctant to add staff, add overhead. Yet the logistics function must be executed and executed well for corporate success. 3PLs can provide the logistics resources and skills needed without adding salary, benefits and other costs associated with hiring direct employees. An external 3PL may overcome internal organizational inertia that impedes a company making its own logistics process improvements. 


Bottom line pressure

Supply chain success--meeting increasing customer order and delivery requirements, increasing inventory turns, managing a complex international and domestic supply chain, and balancing the conflicting challenge of cost and service-are not options, especially if you compete in certain industries. They are required for profitability and survival. A 3PL can be viewed as the vehicle to bring down logistics costs, provide needed logistics information technology without requiring company systems investment and improve the logistics process more quickly than can be done internally. 


Outsourcing

Outsourcing as part of the business model. Outsourcing is an acceptable way for a company to implement, develop and manage its business model and business practice. That makes company executives receptive to doing it as they search for ways to be competitive and profitable. And, as many companies realize, supply chain management success is very important to corporate success.


CHOOSING A 3PL

In the Beginning...Complete Accurate Information 
Selection Criteria...Look, Learn & Listen 


SELECTION CRITERIA

Financial stability
Management
Labour
System capability
Insurance Cover
Facility
Reputation
Niche

THE NEW SUPPLIER RELATIONSHIP

© Copyright Koinonia Ventures Limited, 2006