3PL Update: Differentiate or Die

Third-party logistics providers have had a tough ride over the past two years, but 3PLs looking to thrive in the 'New Normal' are bringing new innovations to the market


Eye on Collaboration

Customers also are looking to their 3PL partners to facilitate opportunities for greater collaboration with peers, says Ben Cubitt, a 20-year veteran of the logistics industry who is senior vice president for consulting and strategic services at Transplace, a Texas-based 3PL. Cubitt suggests that while many companies have become adept at managing their freight and supply chain, they have been stymied at working with peers to effectively collaborate on transportation. The reason, he says, is that companies have historically tried to do collaboration on a lane-by-lane basis. That might work for a couple weeks or a month, but then something changes and the arrangement collapses.

"Now," Cubitt says, "companies are moving from shipment-by-shipment collaboration to really trying to get strategic with a set of partners, and they're looking for the 3PL to be the facilitator of that. They're saying, 'You, Mr. 3PL, have visibility into all our shipments, all our networks, you're agnostic somewhat, so why don't you take the lead and work with our people to implement a solution.'"

In addition, as companies change their business models to adapt to the new economic realities, they are looking to 3PLs who can support the move to new paradigms, suggests Jeff Max, CEO, North America at New York-based Venda, Inc., which provides a software-as-a-service e-commerce platform that allows small, medium and large OEMs to go direct to consumers over the Web. "OEMs have been used to shipping pallets to their distribution channels and partners, and they typically haven't had the infrastructure, systems or relationships necessary to deal with 'eaches,'" Max says. To service these companies, Venda partnered with a 3PL called Quiet Logistics, based in the Boston area. Quiet bills itself as a "fulfillment to consumer" services provider offering an outsourced solution that leverages the material handling robotics of Kiva Systems to handle high levels of transient inventory with very high daily throughput. With a facility just outside the UPS hub in Louisville, Quiet is able to offer next-day fulfillment for many of Venda's clients, a critical service for OEMs going direct to consumer, Max says. "The execution of fulfillment and delivery is the most important thing that these manufacturers will be dealing with."

Visibility as Differentiator

Hinson, at Logistix Worldwide, adds that his company is constantly looking for ways to more deeply ingrain itself in its customers' process. "We're trying to become an extension of our customer and our customer's business, because what we want to do is let our customer focus on that, say, 20 percent of their business that is most important, and let us focus on the distribution chain."

Logistix has worked to differentiate itself from competitors by offering a high level of visibility into goods in its customers' supply chains. Hinson explains that his company has deployed an on-demand warehouse management solution from Manhattan Beach, Calif., solution provider 3PL Central, combined with a Web-based EDI connectivity solution from SPS Commerce. By extending integration all the way back to its customers' suppliers, Logistix provides visibility to inventory not only within its own four walls but across its customers' complete supply chains. That capability gives those customers a higher level of control over goods moving through the supply chain, Hinson says.

For example, a customer could go into the system via a Web portal, pull up a report and see that its supplier has 16,000 units built; knowing that it takes 25,000 units to build a container, and the manufacturer is promising to build so many units over the next two days, the customer gains a better understanding of when the container needs to leave. "That's a strategic advantage for us, both in letting the customers log into the system and get whatever information they need on an on-demand basis, and in minimizing the amount of time that our customer service reps have to spend on tasks that do not require a great deal of expertise," Hinson says.

At the same time, Hinson acknowledges that what is a "cutting-edge" capability today can quickly become part of the base set of services (and customer expectations) for all 3PLs tomorrow. "As we ove forward, some of the services that we have offered as a competitive advantage will become part of our standard offering," he says. "But we have to be consistently looking ahead to what will be the next innovation in our business. There is always strong competition, which I think is a good thing because it raises the bar."

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