As e-commerce and the global economy continue to expand, supply chains everywhere feel the strain. According to the Institute of Supply Management, manufacturing activity grew again in February, marking the sector’s 18th consecutive month of growth. The institute also revealed that the overall economy has grown for 105 consecutive months since the recession of the […]
Scalability has been a corporate focus for the better part of a decade. Businesses that want to consistently hit new benchmarks with minimum strain on their human, financial, and operational resources cannot do it by themselves, though. They must develop mutually beneficial relationships with experienced partners.
Without this expertise, corporations that hit capacity ceilings will be unable to reach the next level of efficiency. They will be tapped out, struggling to address unfilled orders, ineffective communications, and personnel conundrums.
If your team is interested in scaling, it’s vital to begin planning for long-term success early in the process. Nowhere is this more important than in your supply chain, which is one of the top considerations for companies that want to scale their business to meet growing needs. Whether you’re procuring raw materials for production, transporting goods between distribution centers, or delivering products to customers, a business will struggle to increase efficiencies or drive savings without an airtight logistics strategy in place. It also will lack any sort of capital to inject back into operations.
Yes, economies and demand will vary according to a variety of factors. Nevertheless, logistical preparation will be the difference between a business that barely maintains the status quo and one that is able to kick things up a few notches.
Breaking Down the Complexities of Scaling
To illustrate the challenges inherent to scaling, let’s consider a hypothetical situation that is increasingly common in business.
ABC Company’s volume has skyrocketed, much to the delight of its stakeholders. Of course, this positive development has produced a potential downside. Management realizes ABC’s facility and payroll have outgrown the capability of in-house shipping and logistics personnel. If management doesn’t intervene now, ABC might lose its fantastic momentum. It’s a pivotal moment for the company in terms of growth.
The management team has a few options. ABC can keep its logistics operation in-house and hope that the strain doesn’t create worker problems — a definite gamble. ABC could instead work with a service provider to tender its freight to one or two carriers or brokers. At first glance, having a single broker providing all truckload services may seem like a relief, but it costs ABC the ability to negotiate competitive rates and could cause it to pay exceedingly high premiums.
Instead of sticking to these options — neither of which feels like a perfect fit — ABC Company might want to bring in a third-party logistics (3PL) provider. Applying a blend of technology and industry expertise, a 3PL can show ABC the best solution that meets a defined strategy. Not only will the 3PL have accountability for defined deliverables, but it will provide visibility regarding market conditions. Consequently, the amount ABC Company pays to a 3PL will align with its goals to ensure a judicial and value-based allocation of resources.
In this scenario, ABC Company carefully considered how to navigate the complex world of scaling. Not only did it lean on a 3PL to help it painlessly traverse supply chain trends and opportunities, but it likely also increased its profit margins by outsourcing.
Whether you’re new to the logistics marketplace or recently realized your ambitious goals no longer mesh with “the old way” of doing things, you owe it to your business to investigate potential 3PLs before you hit a ceiling that could make scalability a strain.
Reaching Greater Heights With Assistance
The obvious benefit of working with a 3PL with a strong reputation is the provider’s ability to develop an engagement plan based on your unique business model and goals. Based on your circumstances, a 3PL is able to align its resources accordingly.
As with any business relationship, it requires a foundation of open communication to be successful. You need to be transparent regarding your forecasting and promotional activity plans, or the 3PL will be unable to provide the help you need. In return, a good 3PL will offer constructive feedback and suggestions regarding ways you can improve your business.
These open lines of communications will do great things for your company. The increased flow of statistics and suggestions often ends up boosting your customer service. One piece of research notes that seven out of 10 companies that partnered with 3PLs managed to improve their client relations.
Is it any wonder, then, that 86 percent of Fortune 500 companies from the U.S. trust 3PLs for their logistics needs? Satisfied customers lead to more sales and referrals, which naturally help companies achieve scaling targets.
Another benefit of choosing an experienced 3PL is the opportunity to discover evolving and emergent inventory management platforms. Expert 3PLs streamline their systems by investing in tools, including cloud-based proprietary systems. Having real-time fulfillment and information transfer removes common logistics hiccups while increasing efficiencies across the entire supply chain.
Do you want to move beyond your current heights and scale your business to the next base camp? Just as climbers trust native guides to improve their chances of reaching a summit, companies in need of logistics aid can lean on 3PLs to serve as their Sherpas. Working together, you can map out a route that meets the expectations of both parties and seamlessly clears the way for fruitful outcomes.
Are you interested in learning more about how your company can get ahead of technological advances in the shipping industry? Contact us today.