Now that logistics disruptions have become the new normal, at least temporarily, U.S. companies have been reevaluating their supply chains, seeking optimization in both the short and long term. In this article, we’ll look at supply chain optimization efforts that companies are currently undertaking and explain how third-party logistics (3PL) providers can help.
Holding on to more inventory. To mitigate the impact of supply chain disruptions now, and of possible disruptions in the future, many shippers and manufacturers are holding on to larger amounts of inventory. Delays need to be accounted for, and with the supply chain so full of backups, “just in time” delivery is simply not practical for many companies. A safer strategy is to hold on to more inventory to meet all demand in the short and not-so-short term.
How 3PLs can help: More inventory requires more warehousing space. 3PLs that offer shared warehousing services are able to accommodate your changing space requirements by scaling your warehouse footprint up and down throughout the year. Your costs fluctuate accordingly.
3PL providers with multiple facilities may be best able to service inventory fluctuations as they can ‘borrow’ space and resources between locations to serve your needs.
Some 3PLs can also provide contract warehousing services in which an entire building (or part of the building) is dedicated solely to your business. With this model, you pay a fixed rate for a fixed amount of space and services.
Changing sourcing origins. Supply chain re-evaluations have led some to reconsider countries that they source from. By changing the sourcing origin, some companies believe that not only will they be better equipped to deal with disruptions, but they’ll be better able to reduce the time it takes to get goods to their end users.
For example, a recent Washington Post article looked at the efforts of Stanley Black & Decker. The company is in the process of rejiggering its sourcing partnerships and moving manufacturing to countries like Taiwan, while also accelerating plans to build plants in the U.S. and Mexico. Other companies are performing similar overhauls to produce goods closer to their end users.
How 3PLs can help: 3PL providers that offer drayage for ocean shipments (as well as for rail and air freight), can help you strategically plan your moves and how your goods can best be accommodated once they reach the U.S. For ocean shipments into the West Coast, for instance, this include strategies like shipping into the Port of Oakland instead of SoCal when appropriate, and utilizing the Overweight Corridor outside the Ports of L.A. and Long Beach.
3PLs that have their own drayage equipment (i.e., trucks and chassis) are even better equipped to support your supply chain as they can allocate that equipment specifically to your business.
Adapting based on real-time visibility. Prior to the COVID-19 outbreak, changing customer demands for speedy delivery had put more of an emphasis on companies having real-time visibility into their supply chain (e.g., visibility into inventory levels and shipment transit). The pandemic and related disruptions have only intensified the need for visibility as companies need to react to both logistics industry conditions and market conditions quickly and nimbly.
How 3PLs can help: 3PL providers have sophisticated systems that manage each supply chain component (e.g., a warehouse management system [WMS] manages warehouse and inventory activity; a transportation management system [TMS] manages trucking activity) in real time. When you partner with a 3PL for logistics services, you will be given visibility into these systems to manage your supply chain.
Importantly, these systems can integrate with each other and with other systems to give you one point of visibility for multiple operations. Such other systems include eCommerce platforms (e.g., Shopify, BigCommerce, Magento), parcel provider systems, retailer platforms, and your company’s systems.
Leaning on partners for larger chunks of the supply chain. Companies looking for supply chain optimization may do well to rely on fewer partners, while maximizing the ownership of each in terms of supply chain responsibilities. Such an approach can save both time and money as there are fewer handoffs between companies, fewer systems that you need to integrate with, and fewer points of contact when issues need to be addressed.
How 3PLs can help: For each service a 3PL offers, there are often many value-added capabilities that can accompany it. For example, a 3PL that offers “warehousing” may also provide a host of value-added warehousing services that can be baked into their offering. These can include everything from kitting and inventory postponement to display building and repackaging.
On a larger scale, some 3PLs provide multiple services. At Weber Logistics, for example, we offer warehousing, transportation and drayage services. These services can integrate to give you one point of contact (and one point of visibility, one point of billing, etc.) for several large chunks of your supply chain.
Your integrated 3PL is then able pull any strings necessary to support the movement of your products. Need the warehouse to open after hours to receive an incoming container? Need to bump up an outbound shipment from the warehouse to accommodate a retailer? Your integrated 3PL can do those things seamlessly as it controls all elements of the distribution process.
Lean on Weber Logistics for supply chain optimization
Weber Logistics is a 3PL provider that offers integrated logistics services (warehousing, transportation, port services/drayage) from the West Coast. Our capabilities include 15 high-volume warehouses, asset-based trucks and chassis for drayage, LTL, truckload and other modes of transportation, transportation management services for distribution outside the West Coast, and in-house IT expertise that can facilitate systems integration. To learn how you can put this infrastructure to use in supporting your supply chain optimizations in 2022 and in the years ahead, contact Weber today.