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Choosing a 3PL Isn’t Just About Cost Anymore

In order to stay competitive, businesses need to always be looking for opportunities to make better use of limited resources, including personnel, equipment, facilities, and capital. For this reason, many companies wisely turn to third-party logistics (3PL) partners in order to achieve greater levels of efficiency, better customer service, and lower costs.

However, it’s important to know that not all 3PL logistics providers are created equal. Supply chain companies have different areas of expertise, and while  certain companies may come in at a lower overall cost, the level of service and capabilities are often vastly different. A great logistics partner will be able to support a long term competitive advantage for the right price.

Here are some of the key factors to look at when considering different 3PL providers.

Resource Availability

A 3PL partner may have a lower cost due to the smaller pool of resources available to them. Fewer locations, older technology, smaller fleets, and other factors can all play a big role in your company’s ability to meet the demands of an aggressive market.

Look at the network of locations that your 3PL has in place and weigh them against your long-term expansion goals.  For example, if you’re planning on growing on a national level, you want to ensure that your 3PL partner can handle the demands in the areas you are focusing on. Keep in mind that the resources you need today aren’t always going to be the same resources you need in the future.

In addition, top-tier 3PL providers will have strategically-located facilities at the ports of entry to enable smooth import and export of goods across international borders. When shipping products to or from overseas, having the resources in place to handle the necessary processes can significantly reduce the risk of any delays associated with border crossing.


Knowledge & Experience

Another consideration is the level of expertise and industry knowledge that a 3PL can offer you in your specific industry. You’re going to want a team of experts that require very little vendor management with a wide range of hands-on expertise on how to make your supply chain work faster, leaner, and smarter. This knowledge can help keep you within your operating budget and lead to not only meeting your growth goals but exceeding them.

Experienced 3PL companies will have all the appropriate licensing in place and can help make sure that any regulatory concerns related to your products are handled correctly. Their experience also provides assurance that your products will be handled with the proper care, and that they are stored and transported in the correct conditions to reduce the risk of damage or loss along the various stages of the supply chain. When considering different 3PL providers, it can be insightful to take a look at the other businesses they work with, as well as the growth history and evolution of their company. If they are true 3PL experts, they’ll have the heritage to back it up and the client list to prove it. When you’re investing extensive capital in to your supply chain, you want the assurance that you’re making the right choices.

Support When You Need It

While we all expect operations to run smoothly in the supply chain, the reality is that there will always be occasional issues, some minor, some major. The difference between a minor issue and a disaster will depend on the support systems you have in place. This can be one of the biggest differences between 3PL providers, and it can have big repercussions for your business.

Take the time to thoroughly evaluate the 3PL provider’s support systems and customer service capabilities. You will quickly be able to identify which providers are delivering greater value through added service and support.  Getting your operations back on track quickly and efficiently is critical to delivering on customer expectations, and having the right support systems makes all the difference.

Leverage Technology

Of course, it’s not just the physical resources and personnel that make a good 3PLpartner. You also need one who can deliver the best insights that are derived from accurate data in order to guide you to better strategies for growth and success. Technology plays a big role here, and the implementation of systems to gather and transmit critical data can have a huge impact on your ability to adjust to changing market conditions and make better decisions based on your business’s analytics.

Automation of processes is another way that 3PL providers can deliver greater value and help your company boost efficiencies throughout your supply chain. Whether it is in inventory management, order fulfilment, demand planning or materials handling, automation can lead to cost reduction and improve quality control. Look for a 3PL partner that has an expertise in the right automation for your supply chain where it where it gives you the most long term gains.

Take a Step Back and See the Bigger Picture

As you can see, there are many different ways that third-party logistics providers are able to differentiate themselves. This is why it’s important to take a step back when choosing a partner and see a holistic view of what they are able to offer that goes far beyond the simple financial cost. By having a more complete picture of the benefits they can bring to the partnership, you’ll be in a better position to make the right choice for the future of your business.

If you’re looking for a leading 3PL with national coverage, leading edge technology, customized solutions and dedicated customer care, then contact the SCI team today.

Our logistics experts will answer all of your questions and work with you to achieve your goals of a smarter, more efficient supply chain that is ready for the challenges of tomorrow.

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Inventory Control – Retail, Healthcare & Technology

Inventory control is a process that is vitally important to the success of any supply chain, handling any type of material or product, from consumer & manufactured goods to healthcare equipment and supplies.

Inventory control systems allow for important tasks such as product tracking or expiry management, by looking at many critical data points on every item in the supply chain, including: it’s location, the SKU, batch & lot number(s), expiry date (if applicable), how long the item has been in the system, and more. Having this data ensures visibility and allows you to more effectively manage your supply chain.

If your company is spending extra money due to lost products or unaccounted-for goods, the entire organization is affected.

Inventory Accuracy

Counting InventoryAchieving and maintaining inventory accuracy is one of the most important functions of inventory control, contributing directly to the profitability of the entire organization. Unaccounted for inventory creates the need to carry additional goods, along with the associated warehousing and handling costs, both of which quickly eat away at profits.  This will also have a direct impact on your customers’ satisfaction as orders go unfilled, wrong products are received, or orders are fulfilled late.  In the case of retail store fulfillment, this could also translate into lost sales for a retail customer.

Every company strives for 100% Item Fill Rate (IFR), but this is not as easy as it sounds. A company may not be able to send out a product due to stock outs or items being unfit for sale (damaged or wrong specs). To ensure that the IFR is at high levels, many companies choose to pad their inventory levels. This is commonly referred to as “safety stock” and helps to ensure that as many orders as possible are being fulfilled. At first glance this may appear to provide a solution, but in reality it just hides inefficiencies in the supply chain; for example, you may not notice that your supplier is consistently late delivering inventory, or that you are over-carrying a significant amount of stock and your occupancy and labour costs are inflated because of higher storage and material handling fees to support the higher inventory level.

Supply chain planning

Knowing how much iInventory Controlnventory to have on hand at a given point in time can be a major challenge for businesses. However, with accurate forecasting and planning, companies can decrease the uncertainty.  There are many factors to consider when estimating the amount of inventory to maintain in order to meet your customers’ needs. Influencing factors will vary considerably for healthcare organizations, retailers, and technology businesses.

Inventory planning has a different focus depending on the stage of the product life cycle. For example, during the introduction phase, the supply chain must be able to handle rapid growth, whereas during maturity the supply chain priorities are on the ability to reduce cost and keep exact inventory. This can provide a level of uncertainty as the cycle may shift from the introduction phase to maturity phase very quickly or very slowly. The uncertainty level has been also rising due to the unknown timing of the decline stage. It has become harder to predict how long a product will stay in the maturity stage prior to entering the decline phase, and therefore planning the supply chain around the product life cycle has become increasingly difficult.  However, with modern Enterprise Resource Planning (ERP) software, the ability to forecast demand has become more automated and with less deviation, allowing companies & organizations to improve the accuracy of inventory planning decisions.

In closing

Developing an overall inventory control strategy ensures supply chain transparency so that your investment in inventory is properly and efficiently managed. It’s vital to understand that an effective inventory control system can greatly reduce inventory errors by conducting regular cycle counts, telling you exactly where the inventory is in the warehouse, at any given time. This only becomes possible when the supply chain has a strict operational process that encourages regular inventory checks. This ensures that the warehouse management system (WMS) is accurately tracking inventory at all times and that orders are being fulfilled and waste is at a minimum.

SCI understands all the complexities involved with creating, deploying and managing medium and large-scale inventory management systems, and we provide solutions that take that burden away from your business, allowing your whole organization to focus on the things that make you money. SCI promises a 99.9% inventory accuracy rate and 99.9% order fulfillment rate.

If you’re looking to make changes to your supply chain and would like to explore our inventory control processes, contact us today. We’re here to answer any questions you might have, and see how we can help.

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