Five common supply chain challenges a 3PL can help you address
December 27, 2017
Today’s consumer-driven approach creates new opportunities for innovation throughout the supply chain. However, they also make it more difficult than ever to run an efficient, cost-effective operation. Consider the following challenges supply chain leaders face in today’s market — and how third-party logistics providers are uniquely equipped to solve them.
1. Rapidly increasing volume of orders and inventory
Consumers have come to expect more product variety in a digital shopping experience, and 42 percent of global retailers are now supporting “much larger” online SKU counts.¹ This can increase expenses, complexity and picking time within the warehouse. Furthermore, it can lead to potential errors due to coordination with a greater number of vendors or manufacturers and the need to accommodate a greater variety of storage and packaging needs.
Growth is often associated with need to expand real estate footprint, but the right 3PL can find ways to optimize your existing space and processes so that you may not need to add facilities to your portfolio. By using a 3PL, you won’t run the risk of unused warehouse capacity due to their space optimization and inventory optimization capabilities. An effective 3PL will also allow you to nimbly respond to increasing demand during busy periods and fluctuations throughout the year, given their labor management expertise.
FedEx Supply Chain optimizes operations to cost-effectively meet increasing demand. To help one iconic U.S. retailer manage peak and non-peak seasons, a redesign of the facility processes and layout enabled the company to ramp-up three times the throughput without additional capacity.
2. Lack of visibility
As your operations grow in size and complexity, visibility to inventory across every channel becomes an even greater priority. Advanced software programs are the natural solution to ensure you’re capturing data and inventory statistics. They are effective tools for analyzing the information so you can identify opportunities for continuous improvement.
Many operations rely on tier-1 warehouse management systems, such as Manhattan and JDA, to enable tracking and visibility to all SKUs throughout the supply chain. But without proper expertise, system implementations run the risk of being costly and inefficient. This is where it makes sense to rely on a 3PL with implementation and execution expertise to optimize your technology investment.
With more than 172 successful tier-1 warehouse management system (WMS), transportation management system (TMS) and other supply chain software implementations, FedEx Supply Chain has the experience to install and operate complex systems smoothly, while tailoring each to your needs.
3. Latent inefficiencies
A 3PL can allow you to achieve greater efficiency by avoiding additional touchpoints and unnecessary costs. A third-party supply chain expert will be able to analyze your current footprint and solutions, benchmark your costs against the industry and offer recommendations to build a better network. Furthermore, they can often implement a more robust or leaner solution, depending on your needs, by leveraging their existing network. Not only will this improve operational costs, but it will also keep customers from turning to your competition based on the superior service you’re able to deliver.
Having executed hundreds of network analysis studies, FedEx Supply Chain has proven that redesigning returns has the potential to decrease supply chain costs by 8—15%.
4. Labor shortages
According to the 2017 Material Handling Industry report (MHI and Deloitte, 2017), 63 percent of respondents report hiring and retaining a skilled workforce continues to be the biggest obstacle facing supply chain professionals. Without the team you need, your operations, and therefore your customer experience, can suffer. With increasing customer expectations, your operations need to be nimble enough to flex up or down to meet market and seasonal fluctuations.
3PL providers have proven processes to recruit, promote and retain qualified supply chain professionals so you don’t have to.
5. Recent merger or acquisition
Companies are constantly shifting and expanding, and your business is likely no exception. When companies transition, integrating massive operations and a multitude of different systems is an enormous undertaking. For example, in one case a North American retailer retagged their entire inventory to ensure SKUs would sync with all systems.
Enlisting the expertise of a 3PL is a logical solution in such cases. Their supply chain experts will optimize how your various systems (both hardware automation and software controls) work together, ensure redundancies are removed and implement new technologies to ensure information syncs seamlessly across your business.
According to Deloitte’s M&A 2016 trends report (Deloitte, 2016), corporate executives consider effective integration planning the No. 1 factor to ensure M&A deals are successful.
Every company has an area of expertise — from apparel retail, to industrial manufacturing, to pharmaceutical distribution, etc. By partnering with a 3PL provider, you can increase your bandwidth to focus on your company’s most important functions, while maintaining visibility and achieving customer service objectives.
If you’re interested in learning more about how FedEx Supply Chain can enable your business growth, contact us today.