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Manufacturers Looking For Total Value From National 3PLs Are Missing the Strategic Value Needed to Drive Stronger Growth

Some customers hesitate to work with a regional partner for fear of “putting all of their eggs in one basket.” However, doing business with a nationwide behemoth can trap them in a swamp of bureaucracy. While I worked at nationwide 3PLs like Schneider, I used name recognition to open doors and find opportunities with manufacturers without realizing that our customers were not seeing the true strategic value. Nationwide 3PLs claim to leverage stronger networks to provide cost savings, but in reality, lack the dexterity to be able to flex to meet customer requirements. This leads to customer frustration, poor service, and ultimately greater cost on the back-end.

For example, the national 3PLs are slow to affect change and senior level leadership is not as engaged with a customer’s needs. I’ve seen manufacturers fail to get the ROI they expected from their TMS/WMS because implementations were slow and the technology wasn’t flexible to customer requirements. There was limited top-to-bottom understanding of customer needs or engagement and alignment with key organizational objectives. So while we talked about being strategic, we provided vanilla solutions that did not truly meet the customer’s needs. The lightbulb turned on when I went from working with the national players to becoming the SVP of Sales and Marketing for RGL Logistics, a regional 3PL in the Midwest.Screen Shot 2019-08-07 at 2.10.50 PM

I saw first-hand, the intimate customer understanding that our CEO, COO, SVP of Operations and leadership had with our clients and how it allowed manufacturers to accelerate efficiency, inventory turns, go-to-market initiatives and cash conversion cycles while reducing costs (labor and productivity). It’s how we were able to protect plants from failed direct shipments and OTIF non-compliance charges. To achieve total value, 3PLs need to align with your needs to provide more than just cost savings. They need to respond to customer needs with quicker decision making, tech that is nimble, and understand the local labor market to quickly scale up services to meet evolving needs.

How Only a Regional 3PL Gains Top-to-Bottom Alignment Around Your Business Objectives

While working for another 3PL, I met with a mid-market customer whose inbound network is managed by one of the large industry providers. I was surprised to learn that the issue holding the customer’s business back was supplier compliance and that the provider had not developed any solutions for them.

The problem is that strategic leadership at national 3PLs with large networks are so far removed from their customer’s operations. They are not close enough to have an intimate knowledge of transportation, warehouse, and DC operations to understand how the inventory needs to flow to get to customers on time and in full. They don’t understand how turns and growth can be maximized or the day-to-day challenges that operations face. It’s why our CEO, COO, SVP of Operations and myself meet with clients, account managers, and the operations team on a bi-weekly basis, and provide ongoing leadership support. This is what I mean about top-to-bottom engagement. Everyone, including our CEO, works together to ensure business objectives are met.

How Only a Regional 3PL Has the Flexibility to Quickly Respond to Changing Business & Customer Needs

Most national 3PLs have so many bureaucratic layers focused on their own P&L that it can take months to make decisions that reduce customer risk and cost. Customer experience gets lost in the shuffle. By contrast, when you have top-to-bottom engagement and understanding of current challenges, a consensus around a solution can be created fast. When you use nimble, flexible platforms that may not be recognized by Gartner but meets your needs, implementation time is also accelerated. For example, when we implemented custom direct-to-consumer WMS technology for a new e-fulfillment operation in Green Bay, the WMS was ready in weeks - not months.  

How Only a Local/Regional 3PL Can Manage Labor to Avoid Operational & Customer Disruption Risk

In a recent article, 3PL Central wrote how manufacturers will continue to face challenges in attracting new talent this year as there is a shrinking labor pool and strong demand for more warehouse/DC workers due to the rise of e-commerce and omnichannel fulfillment within traditional manufacturers. This is why it’s important for manufacturers to work with regional 3PLs that have an understanding of the local labor market, and the ability to quickly staff, train and onboard employees to meet business and customer demands. Unfortunately, many 3PLs do not have local market insights.

For example, when the retail store chain, Shopko, announced bankruptcy and closed all of their stores, there was a job fair for the entire DC in Green Bay. RGL was the only 3PL to attend that fair, and we were able to fill nearly a dozen warehousing/DC positions for our clients’ needs. It’s the local insight that helps avoid a slow ramp-up time that leads to warehouse/DC congestion, slower inventory turns, increased risk of failed direct ships and non-OTIF compliance, unnecessary expedites, and transportation freight cost increases of up to 25%.

In addition to local labor market insights, only a regional 3PL is able to quickly reassign and flow “as needed” resources from one customer to another to avoid disruption to the warehouse, DC, supply chain, and the customer. This balancing and rebalancing of labor allow manufacturers to cost-effectively manage demand fluctuations, peaks, and troughs.

In reviewing your 3PL relationship, do you have a strategic partnership? Does the CEO, COO and SVPs have an intimate understanding of your operations, your specific challenges and your vision?. Can they deliver new solutions in weeks rather than months?

Topics: warehouse DC