The UKWA Blog

Thursday 10 September 2009

Use the Experts

Because most companies have a major percentage of their costs tied up in their supply chains, supply chain management - once seen as something of an add-on with no real bearing on a business’s ultimate success - has been elevated to a key board-level discipline. And in the current economic climate, an optimised supply chain is now considered vital for any business hoping to avoid the jaws of a nasty recession.

The approach to supply chain optimisation has traditionally focused on one piece of the puzzle at a time. These can include sourcing goods and services strategically to strike a balance between lowest material and transportation costs; maintaining the right mix and location of factories and warehouses to serve customer markets; and, using traditional logistics techniques to maximize distribution efficiency.

However, since the 1980s there has a been a sharp upturn in the number of companies that choose to outsource logistics and supply chain management functions to 3PLs.

Typically, 3PLs specialise in integrated warehousing and transportation services that can be scaled and customised to a customer’s needs. The kind of service offered will be based on a client company’s own unique market conditions and the demands and delivery service requirements for the goods that company produces and sells.

In today’s price sensitive market, the need to drive cost out of the supply chain is often cited as a major reason for using third party logistics service providers. However, perhaps a better reason for engaging outside experts is the in-depth knowledge, flexibility and added value that a specialist contractor can provide. In short, as well as helping companies to achieve significant cost savings, a good 3PL will enable a business to enjoy shorter order cycles, better customer service and improved all-round business efficiency.