What challenge(s) do our clients face?
The heart of a logistics operation beats. Working with a third-party logistics provider leverages scale and know-how, but if mismanaged, can bring severe customer impacts
With the rise in global supply chains, SKU volume and complexity, and customer expectations for on-demand items, balancing information flows (orders) and physical flows (inventory) in the warehouse has become increasingly challenging. Warehouse management requires deep technical understanding and flexibility to adjust to reality – or else it is easy for small issues to fester until they become major breakdowns, directly impacting customers who suffer from reduced service levels.
Despite their criticality, warehouses are often not given the attention they deserve by organizations, who tend to underrepresent their value on the P&L compared to capabilities like transportation, which have a higher direct cost attached. Getting warehousing right is important – and it can be a sensible strategic move to outsource operations to a third-party logistics provider (3PL), who brings scale and operational skills that might take time to develop internally.
While the potential gains from outsourcing are high, we have seen common challenges among clients in different industries, which can have amplified negative impacts:
- Knowing your operation in detail and being aware of the rationale behind outsourcing, making expectations clear internally and with the potential service provider
- Selecting the right partner, among heterogeneous players, considering the match between your needs and their reality (typically characterized by narrow margins)
- Building a contract which effectively incentivizes the 3PL to deliver against your objectives
- Managing the 3PL on the day-to-day, to ensure targets are met and issues are escalated
How do we help?
We support clients through the entire lifecycle of logistics outsourcing, from strategy conception through to Go-Live