September 28, 2023
The Art and Science of Demand Forecasting in Logistics: Strategies for Accuracy
In the fast-paced world of logistics, accurate demand forecasting is a critical element that can make or break the...
Businesses are increasingly seeking to treat Logistics Companies in India strategically to gain a competitive advantage. Greater flexibility, operational efficiency, reduced cost, improved customer service levels, and a better focus on their core businesses are part of the advantages that may accrue from logistics but businesses often lack the competence to run efficient logistics services.
When Should You Consider a 3PL?
The decision about whether a business should hire a 3PL company is one that can involve numerous variables.
If a company is growing aggressively, rising costs such as labor, manufacturing, facilities, and staff expenses – can get out of hand in a hurry.
3PLs also can take advantage of the latest and most modern technology. By hiring a 3PL, a company can gain those technological benefits without making the financial investment themselves.
Those 3PLs with in-house IT teams that develop and provide their own B2B integration, WMS, TMS, and inventory management software can be a big selling point for a third-party logistics provider.
Many companies choose to work with a 3PL after experiencing perpetual inventory inaccuracies, inefficiencies, and other critical mistakes. Inconsistent inventory capacity and unpredictable costs can cripple a business and its reputation, but a 3PL with reliable inventory solutions can prove beneficial by streamlining the flow of goods for optimized resource consumption and delivery.
4 Forms of 3PL Logistics For Outsourcing
The following parameters are to be considered while choosing an effective 3PL partner:
The majority of 3PL providers specialize in one of three domains.
3PLs outline responsibilities via service-level agreements, or SLAs. Service agreements can also designate critical information and workflow communications, such as proper points of contact for invoicing, proof of delivery, quality control inspections and more.
It’s essential to understand warehousing 3PL’s asset ecosystem. Does the provider have a proprietary storage facility, or rent from others? Similarly, your products may require multiple storage stops throughout domestic or international distribution. Does your 3PL provider own and manage every warehouse along the transportation route? Consider factors such as :
A 3PL’s IT infrastructure is a significant piece of their competitive differentiation pie. Does a 3PL partner own and operate the contemporary technology necessary to uphold their end of the SLA? Consider factors such as
Performance-tracking capabilities are another of the essential factors to consider when choosing a 3PL partner. They give you the assurance your 3PL strategy is successful — and your chosen 3PL provider is supporting their end of the bargain.
Focus on measuring the effectiveness, accuracy and cost savings of the outsourced logistics outlined in your SLA. Positive improvements across these activities signal, with objective figures, you made the right choice. For example, consider monitoring and analyzing any of the following:
Service add-ons are in both parties’ best interests. For the 3PL, value-added amenities — such as IT asset integration — provide competitive differentiation.
Common service add-ons and amenities you can engage in include:
You don’t need reminders on how essential pricing is to your third-party logistics contract. While part of the goal is cost savings — outsourcing aspects of the supply chain so you can streamline and strengthen internal resources — be cautious of too-good-to-be-true contract terms. With functions like order fulfillment, packaging, kitting and more, paying for quality is especially critical, ensuring the reputation of your business and the longevity of your brand.
Bear in mind other pricing parameters and “hidden” costs to take note of before signing a 3PL contract:
International and even domestic supply chains require in-depth expertise into customs, trade requirements, permits, itemizations and more. In freight forwarding operations alone, a 3PL must be able to efficiently — and legally — administer the following:
Non-disclosure agreements (NDAs) in the 3PL partnership assure the protection of both parties’ intellectual property. More specifically, these documents outline everyone’s respective responsibilities and capabilities, plus assures these responsibilities get carried out in private, to the benefit of all in the agreement.
Organizations typically draft NDAs for all prospective 3PL candidates, at the onset of any contract negotiations and often well before the formal SLA. Your organization’s attorney or legal counsel will be instrumental in creating NDAs with the appropriate language and boundaries for this stage of the vetting process, including beginning to understand a 3PL’s legal liabilities and insurance coverage needs in any future partnerships.
Last but not least, only consider 3PLs with a proven, positive name in the industry. The supply-chain management industry has undergone a radical revolution over the past decade. Many new companies emerged as a response to today’s still-growing e-commerce boom and globally connected marketplace. But are these companies ready and worthy of your business? Conversely, is experience always synonymous with expertise?
Look for the following parameters before signing up with a 3PL Provider:
Outsourcing supply chain management or choosing the right partner amongst the supply chain companies in India is a tedious task, but it is worth it in the long run. It is necessary to collaborate with the top supply chain companies in India that offer a global fulfillment network, best-in-class technology, and supply chain expertise.
Through varied in-house expertise and strategic acquisitions of businesses with differentiated domain expertise, TVS SCS has evolved into a provider of value-added solutions with a robust technology ecosystem.
TVS Supply Chain Solutions is one the top supply chain companies in India providing integrated supply chain solutions. We focused on moving up the customer’s value chain with various technology-based solutions. TVS SCS has helped its customers seamlessly run operations by solving supply chain complexities using a technology platform. Solutions also involve customers outsourcing their complete supply chain on an end-to-end basis. TVS SCS developed partnerships with customers across diverse and high-growth industries, which offer various outsourcing opportunities.