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.
Regardless of how tempting it might seem, the fastest and cheapest route is not always the right choice.
Think about the last time you bought a nice outfit. Snagging a suit off the discount rack at a department store will save you a few bucks today, but it’s not likely to impress anyone at your next job interview. You could also invest some extra money now to get a custom-made garment from a local tailor, ending up with an outfit that makes you look like a million bucks. Five years down the road, which suit do you think will still be in your wardrobe?
In other words, inexpensive fixes can come back to haunt you. A tailored option will be your new best friend, and a one-size-fits-all solution will not likely stand the test of time. Finding an ideal third-party logistics (3PL) partner requires the same sort of careful consideration and pragmatism as buying a treasured article of clothing.
Although most companies understand they need to look beyond price when it comes to shipping — “cheaper” often hinders scalability and affects consumer confidence — they are not always sure how to find a provider that will deliver superior results. A true logistics partner will understand your business, create a customized service for your shipping needs, and provide complete transparency in terms of where your money is going.
The Importance of Reading the Fine Print
If you need outsourced 3PL services, don’t instinctively put all your eggs in an off-the-shelf basket. Before you sign on the dotted line, spend some time reading the fine print to ensure you choose a partner that can design a strategy based on your operations, budget, and objectives. These four steps will get you started:
Focus on providers that understand your business.
One of the quickest ways to narrow your initial list of potential 3PL providers is to figure out which ones have worked in your industry before. Unless you operate in a completely unique and emerging business segment, you will likely be able to find firms accustomed to working in your sector. This foundational knowledge will decrease the amount of time 3PLs require to understand how to best serve you and your customers. Contact references in your industry to ensure other companies have had satisfactory experiences with your preferred candidates.
Prioritize accountability and transparency.
Any vendor should be turning a profit for its services, but you want a partner that offers complete transparency in terms of where your money is going. A credible 3PL firm will be transparent about its rates, aligning compensation with value shared by both parties.If a 3PL is reluctant to provide honest answers about its upfront and continuing costs, you should look elsewhere. Considering that about 90 percent of Fortune 500 corporations in America use 3PL providers, there are plenty of genuine companies out there that will be willing to stand behind their service.
Expect plenty of close interaction.
Does one of your top candidates claim it will not need much of your time? Consider that a major red flag. Any worthwhile 3PL partner will want to have multiple conversations with you and your team members from day one.Your internal teams will have a variable level of engagement with your logistics partner over time, but everyone should be highly engaged and working in tandem during the implementation phase, which can last up to three months. Be suspicious of firms that promise to have you up and running with minimal effort in a matter of weeks. If potential providers don’t prioritize communication and collaboration early in the relationship, that is not likely to change months or years down the road.
Be prepared to share information.
You might feel hesitant discussing proprietary information with outsiders, but it’s absolutely necessary to let any 3PL you are considering know everything you can about your current supply chain. These conversations should cover everything from shipment volume to delivery locations to transit times. The more information you are able to provide, the easier it is for potential partners to evaluate your current situation and propose a customized solution to resolve any issues.
Finding a 3PL partner is not a simple process, but the time you put in at the outset will more than pay for itself later. Once you have developed a short list of potential providers, issue an RFP to ensure everyone bids from the same starting place.
Dedicate ample time to reviewing proposals and performing due diligence. Meet with top candidates face to face, tour their offices, and get to know their teams. After a thorough evaluation process, you will be free to sign a contract knowing you have made the best decision for your company and the customers you serve.
Want to figure out whether Sheer could be a great 3PL partner for your company? Contact us today to develop a plan for your business based on our extensive logistics expertise.
Companies that don’t have a dedicated logistics department don’t always have insight into how complex shipping their freight can be. Some of them, however, are aware of this shortcoming and, therefore, rely on big corporations with high brand/name recognition that they see as leaders in the transportation industry. Unfortunately, the biggest name in the business isn’t always the best partner for your company.
Instead of handing shipping responsibilities over to a brokerage firm, your company could benefit more from partnering with a consultant who understands the logistics of shipping your specific type of freight. At Sheer Logistics, we don’t come in and dictate how we’re going to ship your freight. We collaborate closely with you to determine the best approach, help you find carriers that best suit your needs, and help you handle as much of the operation as you want to.
Building a Better Mousetrap for Clients
Any professional working in transportation understands that the more complex your supply chain is, the more factors you’ll need to consider when looking at potential carriers. For instance, if you make a small product, how much should be shipped at a time? Shipping a less-than-full load could prove more expensive than you initially thought, and you could risk a loss if the carrier isn’t properly equipped to handle the small size of your freight.
Some carriers specialize in transporting certain types of products, while others are experts in handling different sizes of freight. Choosing the right providers can be confusing, which is why a logistics partner offers much more than just transportation. We share our expertise and apply it to helping clients determine which strategy works best for them and their unique situation.
To remain client-centric, our consultative approach focuses on three major factors:
Sheer combines specialized expertise, advanced technology, and powerful analytics to help you streamline your shipping operations. Yet what truly sets us apart is our dedication to engaging strategically with our clients, which begins with an unique level of transparency.
As your consultants, we’re able to engage with you from a project management perspective. When you have complicated freight to ship — like shopping carts, for example — factors such as multiple drops and steepness in the road can make shipping a challenge. We add value by analyzing the entire project, leveraging our systems to find the most cost-efficient shipping methods, and participating as one of several different carriers.
Transparency and engagement also allow us to provide a diverse range of solutions that truly empower you to drive the process yourself as much as you wish. You can be more confident in the process when you know that operations are in your control, and we can leverage our services accordingly depending on your desired level of engagement.
Rather than take over the shipping aspects of your operations, we empower you to work with existing carriers and even procure new carriers that offer the best service. We also participate as a carrier, but at the same time, we give you the option to be in charge of tendering your own freight. Our service complements what your program already looks like, and it drives value by helping you save money and be more profitable while remaining in control.
Giving clients options and power over their shipping processes is only possible thanks to our ability to personally qualify opportunity areas, which is driven by strategic reporting and analysis. We didn’t invent the wheel, and we don’t try to dictate which way you should turn it. Instead, we help you figure out how the wheel would work best for you.
The backbone of our versatility is the ability to provide business intelligence and technologythat’s best in class. The difference is that we use our resources to deliver relevant data points in a manner that’s tailored to your specific business needs. That means delivering the information you need, when you need it. Through our online portal, you can obtain real-time logistics data on carriers that are en route with your freight and receive real-time email notifications with customized updates.
The difference between working with a big-name firm and partnering with a more consultative company like Sheer is the customized approach that the big guys simply can’t provide. We’re consistently committed to engaging and empowering clients through excellent service, transparency, communication, and cost savings, regardless of their size.
Ready to team up with a true logistics partner? Contact us to discuss how Sheer can help you meet your transportation goals.
According to a survey from the Harvard Business School, outsourcing key components of business operations has increased in recent years. Almost half of respondents to that survey said they preferred outsourcing to hiring new, full-time employees. Only 1 in 4 felt that hiring new employees was preferable to outsourcing.
Why Is Outsourcing So Attractive to Business?
Outsourcing offers several key advantages for business, including the following:
- Focus on core competencies: an increasing number of companies are outsourcing costly, labor-intensive operations which are not part of their core competencies. Among the most frequently outsourced operations are customer support, accounting, data entry, and research and development.
- Cost savings and reduced overhead: outsourcing can reduce full-time employee costs, such as those for healthcare and retirement contributions. It can also cut overhead—for example, a growing business might not have sufficient office space in its current location—outsourcing activities like customer support and data entry solves that problem.
- Seasonal flexibility: outsourcing is ideal for companies which experience cyclical demands. For example, an accounting firm might need additional help during tax season; outsourcing part of this function can get the job done without taking on more permanent employees.
- Business continuity: businesses which experience sudden increased turnover can outsource key operations for limited periods of time. For example, if a chief marketing officer leaves without warning and takes several of his supporting staff with him, the company can outsource marketing operations until suitable replacements have been found.
Logistics Management Outsourcing
Outsourcing has become increasingly popular among shippers and manufacturers in recent years. Their core strength is in making products, as well as on procurement and streamlining production. Outsourcing allows these companies to fulfill orders more efficiently through third-party logistics (3PL) providers.
A recent report from Armstrong & Associates highlighted the extent of growth in outsourced logistics management. It found, for example, that third-party logistics grew by almost 5% from 2010 to 2013. The lion’s share of that growth was in 4 industries: industrial, healthcare, technological and food and groceries. Domestic transportation management was dominant in outsourcing demand, accounting for almost 25% of all 3PL demand. Warehouse management accounted for almost 20% of demand.
What Are the Major Benefits of Outsourcing Logistics Management?
Outsourcing logistics management has several key benefits for shippers, including the following 4:
1. Enhanced Productivity
Transportation management is extremely complex and labor intensive, requiring working with multiple vendors, customers, suppliers, carriers and administrators. Outsourcing transportation management frees up shippers to focus more intensely of core, revenue-generating activities, like procurement or building more collaborative relationships with suppliers. This leads to enhanced productivity and a stronger bottom line.
2. Improved Outcomes
Third-party logistics providers are experts at what they do, and they have access to the latest and most effective transportation technology. They are trained to identify problems with your transportation footprint and provide effective solutions for transportation accounting and freight claims, among other areas. Said differently, when you hire professionals, you get professional results.
3. Continual Improvement
Many shippers have neither the time nor the interest in chasing down complex business intelligence data, but building, accessing and analyzing that data is critical for continual improvement. When you outsource logistics management to a 3PL, you’ll be provided with key reports and custom analysis to enhance operations. With a clearer picture of which areas are functioning efficiently and which need improvement, you’ll have a leg up on your competition.
4. State-of-the-art Technology
Best practice for shippers is the use of a transportation management system (TMS), which simplifies supply chain functions and reduces costs. This is especially true as more companies turn to multiple sales channels and distribution methods. Incorporating this technology is critical to remaining competitive—outsourcing to a 3PL which provides access to transportation management system technology solves this problem.
If your company is struggling with transportation management and experiencing increasing costs, it might be time to consider outsourcing. To learn more about the ways our logistics, transportation and intelligence services can help your company reduce costs and increase efficiency, contact us today.