| The Face of Supply Chain Outsourcing Supply Chain | | | | 3PL is not to familiar with the clients operational |
| outsourcing has changed significantly over the last | | | | processes, its customers and its products. Giving to |
| decade. | | | | much control and decision making to a new 3PL will |
| Supply Chain Outsourcing to a Third Party Logistics | | | | cause friction in the day-to-day business operations |
| Provider or 3PL started out as having a product | | | | between the 3PL and its client due to |
| stored at an outside warehousing facility and then | | | | misunderstandings, lack of familiarity of business |
| have the 3PL move the product from one facility to | | | | processes, and other requirements that were |
| another based on instructions provided with each | | | | communicated either insufficiently or not at all. |
| transaction order. | | | | At the same time will the 3PL client's staff not be |
| Today's 3PL providers offer a range of additional | | | | familiar with the 3PL's operations and its issues and |
| services that range from | | | | challenges. For this reason the client needs to monitor |
| * Physical logistics operations, like shipping and | | | | the 3PL's operations and be able to assist and |
| receiving. | | | | intervene right away until both sides are satisfied |
| * Provide warehousing. | | | | with the final outcome of the processes assigned and |
| * Manage complex operational handling, that may | | | | its expected results. |
| include repackaging, product maintenance, product | | | | Keeping to much control in house at the client will |
| consolidation | | | | have similar effects. |
| * Administration. | | | | To much back-and-forth communication is required |
| * Information Management Systems that integrate | | | | which can lead to misunderstandings and untimely |
| into and from a client's backend ERP System, and | | | | business process fulfillment. |
| automate the flow of transaction data, therefore | | | | It can lead to friction between both parties due to |
| minimizing human intervention and reducing data | | | | misunderstood instructions and can be seen easily by |
| errors. | | | | the 3PL as being micro-managed. |
| * Providing customer broker services. | | | | It can lead to delays in any physical operations as it |
| * International freight forwarding, which may include | | | | may pertain to shipping and receiving products into |
| the creation of all required customs forms and | | | | and from the 3PL location or processing and |
| complying with all customs regulations (import & | | | | submitting the required paperwork or electronic |
| export) as well as providing so-called | | | | equivalent transactions. |
| "Free-Trade-Zones". | | | | It is imperative to define responsibilities clearly. It is to |
| The type and number of services provided by the | | | | nobodies favor to have contract and service level |
| 3PL are defined during the engagement and contract | | | | agreements that leaves the agreement up to |
| phase, which also includes Service Level Agreements. | | | | interpretation by either party. |
| These add-on services can quickly multiply and must | | | | Any relationship with a new 3PL should be setup in |
| be considered carefully. | | | | stages with clearly defined time-lines in order for all |
| Most important in any new 3PL relationship is not to | | | | parties to understand the expectations and |
| go overboard and assigning to many services to the | | | | responsibilities now and in the future. |
| 3PL or not enough. Both scenarios can have not only | | | | Not doing so may lead to increased cost and delay in |
| a negative impact on your business but also on the | | | | business processes implementation as well as it can |
| business relationship between a 3PL and its client and, | | | | put unnecessary strain on the business partnership. |
| "Very Bad", the client's customer. | | | | Having a clearly defined Supply Chain Outsourcing |
| Why wouldn't you give away as many business | | | | Plan, will be a win-win situation for all parties involved, |
| processes as possible right away to the new 3PL? | | | | starting at the manufacturing operation, over |
| Can it not just be in my interest to reduce my | | | | warehousing and distribution to the final customers. It |
| internal processes and labor in order to justify the | | | | can lead for all parties to a reduction in cost and |
| outsourcing cost? | | | | increase profits, since each party can concentrate on |
| The danger here is, since it is a new partnership the | | | | their core business processes. |